Traders prefer to buy things when they are low and sell them when they are high. This is the premise for almost every market whether it is stocks, futures, or options. In the world of options, we are able to measure whenare high and low based on the in the options. The main measure we look at relative to IV and options prices is .
In today’s Options Jive, Tom and Tony show off the IV Rank calculation and how it works. After highlighting the importance of this measure, the guys apply high and low IV Rank to strategies in an attempt to clarify what high or low options prices mean to our most popular options strategies like theand the .
Check out the segment above to see how IV Rank is calculated and used in options trading.