Using Implied Volatility & IV Rank to Trade Options



Learn how you can use Implied Volatility (IV) and IV Rank in order to find option trading opportunities! See the latest tastytrade videos: http://bit.ly/1rYrrVe Implied Volatility (IV) is one of the most important factors when trading options. IV is the expected range for an underlying in the next year, expressed as a percentage of its price. A change in the percentage of IV directly impacts the price and therefore the probabilities of an option. However since every stock has a different IV as well as a past IV range, we cannot compare two stocks solely looking at their IV. Instead, we will use a metric known as IV Rank. IV Rank is where the current IV of an underlying is relative to its range of IV levels over the past year. Today, Tom Sosnoff and Tony Battista explain how IV Rank is used when trading options. They guys explain how they use IV Rank to compare the IV of different underlyings in order to find the best trading opportunities! ======== tastytrade.com ======== Finally a financial network for traders, built by traders. Hosted by Tom Sosnoff and Tony Battista tastytrade is a real financial network with 8 hours of live programming five days a week during market hours. Tune in and learn how to trade options successfully and make the most of your investments! http://goo.gl/EaF69C Subscribe to our YouTube channel: http://goo.gl/Szl24S Watch tastytrade LIVE daily Monday-Friday 7am-3pmCT: http://goo.gl/EaF69C Download our mobile app, Bob the Trader: http://goo.gl/zgIyco Follow tastytrade on Twitter: https://twitter.com/tastytrade Become a fan of tastytrade on Facebook: https://www.facebook.com/tastytrade Follow tastytrade on LinkedIn: http://www.linkedin.com/company/tastytrade Follow tastytrade on Instagram: http://instagram.com/tastytrade Follow tastytrade on Pinterest: http://www.pinterest.com/tastytrade/

Comments

  1. Great, thanks for explaining this! It all makes sense to me now.
  2. Real Time: IV Rank is calculated using the formula that is found on slide 6 of the presentation. This can also be plotted on the TOS platform using a custom thinkscript that is available on the tastytrade website. On dough (www.dough.com), under the Grid page, you can sort by underlyings that have a high IV Rank. Here you can set any rank that you would like to scan for and all of the underlyings that fit your criteria will be returned.
  3. I really liked this teaching but I would not know where to get the low and highs of IV for any period, even the last week.  Can you tell me where do I get the data to use the above formula to calculate rank?  Second, is there a daily updated list of ranked stocks?   Does your website provide the rank?  Would you be able to implement on your website a rank calculator?  I would love to be able to use this concept but without data only those with access to it can benefit.  Thanks.


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Visibility: 3959

Duration: 10m 25s

Rating: 36