IV Rank (IVR) is a normalized measure of implied volatility that tells you whether IV is currently high or low relative to its own recent history. It is calculated as: IVR = (Current IV − 52-Week Low IV) / (52-Week High IV − 52-Week Low IV) × 100.
An IVR of 0 means current IV is at its annual low. An IVR of 100 means it is at its annual high. An IVR above 50 is generally considered elevated and favorable for option sellers.
Why Wheel Traders Use IVR: Selling premium when IVR is high gives you richer premiums and more buffer room. Selling premium when IVR is at 10 means you are getting paid very little for the risk you are taking.
IVR vs. IV Percentile (IVP): IVR can be distorted by single outlier events (e.g., one day of extreme volatility). IV Percentile (IVP) measures the percentage of days in the past year where IV was lower than today, providing a more stable comparison.
Examples of IV Rank (IVR) in Action
- 1TSLA with an IVR of 72 — IV is near the high end of its annual range, a good time to sell premium.
- 2SPY with an IVR of 8 — IV is near annual lows; premium is thin and not worth the risk for most wheel traders.
- 3NVDA spiking to an IVR of 95 before earnings — extreme IV, but earnings binary risk must be weighed carefully.