Definition
IV Percentile / IV Rank
IV rank and IV percentile show where today's implied volatility sits relative to its own range over the past year.
IV rank scales current IV between its 52-week low and high (0 to 100), while IV percentile measures the share of days in the past year when IV was lower than today. Both answer the same question: is volatility cheap or expensive right now, in this stock's own context?
Indian option traders use these to decide whether to buy or sell premium. High IV rank on an NSE stock or on Nifty (often tracked via India VIX) favours selling strategies like iron condors; low IV rank favours buying strategies like long straddles, where premium is cheap.
Related terms
- IV CrushIV crush is the sudden collapse in implied volatility — and option premiums — right after a major event passes.
- Iron CondorAn iron condor sells an out-of-the-money call spread and put spread to earn premium in a range-bound market with defined risk.
- Implied VolatilityImplied volatility (IV) is the market's forward-looking estimate of how much a stock or index will swing, backed out from current option prices and expressed as an annualised percentage.
- India VIXIndia VIX is the NSE's volatility index, measuring the market's expectation of Nifty volatility over the next 30 days — popularly called the 'fear gauge' because it spikes when investors turn anxious.
Plain-English explainer from Investdesk Investors Encyclopedia. General information, not financial advice.