Been trading options for a few months and keep hearing about implied volatility rank. Most of my trades haven’t been good lately.
I wonder if this IV rank could explain why I am picking the wrong times to enter.
Has anyone else noticed better results after focusing on this? Feels like I might be missing something important.
High IV rank usually means premiums are expensive, better for selling options.
Timing is everything with IV rank - wish I’d learned this sooner. Low IV rank means cheaper option premiums, so that’s when you want to buy.
Markets always overprice options during panic and underprice them when it’s quiet. Checking IV rank first saved me from some expensive mistakes.
Look for IV rank under 25 to buy options, over 75 to sell them.
Did this exact thing three months ago - bought calls right before earnings with crazy high IV.
Stock went my way but I still lost money because vol crush killed the premium. Learned to always check IV against its 52-week range after that loss.
Now I won’t buy anything above 50 IV rank.
IV under 20 indicates a buy signal. IV over 80 suggests a sell signal. Compare current IV to the 30-day moving average for increased accuracy.
You’re likely buying options when IV is too high. It’s easy to see a stock moving and jump in at those inflated prices. Instead, avoid buying options when IV rank is above 50. You’ll just pay too much and face time decay. Wait for IV to drop; options will become cheaper and better opportunities will arise. Make checking IV rank a habit for every trade. This straightforward approach has worked better than any complex strategy I have tried.