What Is the Significance of the ‘IV Rank’ or ‘IV Percentile’ for Options Traders?

IV rank (or percentile) is a measure that compares the current implied volatility (IV) of an asset to its historical range over a specific period (e.g. the last year). A high IV rank suggests that the current options are expensive relative to their historical volatility.

Traders use this to determine if IV is high or low, informing strategies like selling options when IV is high (high IV rank) and buying options when IV is low (low IV rank).