IV Rank on thinkorswim | Where is Implied Volatility Rank on thinkorswim?
While there is no default indicator for IV rank on ThinkorSwim, you can still add it to the platform.
Key Takeaways
IV (Implied Volatility) Rank is a metric used by investors to assess the relative value of an option's current implied volatility compared to its historical levels.
IV Rank is expressed as a percentage, with higher percentages indicating that implied volatility is currently higher than it has been in the past and lower percentages indicating that implied volatility is currently lower than it has been in the past.
Investors can use IV Rank to help identify potential opportunities for buying or selling options, as a high IV Rank may indicate that options are relatively expensive, while a low IV Rank may indicate that options are relatively cheap.
Where is Implied Volatility Rank (IV Rank) on ThinkorSwim?
By default, implied volatility rank is not a default indicator on ThinkorSwim. However, the ThinkorSwim IV_Percentile indicator is actually an IV rank calculation mislabeled.
To prove this, I will simultaneously compare the Tastyworks IV rank with the ThinkorSwim IV percentile on the same stock.
thinkorswim
In the image above, the IV percentile of TSLA on ThinkorSwim is 71.09.
tastytrade
The image from Tastyworks above says the IV rank of TSLA is 67.
These numbers are slightly different, but it is clear that they are likely both IV rank calculations since the IV percentile on Tastyworks is much higher at 95.
How to Add IV Rank on ThinkorSwim
There is also a custom Tastytrade IV rank indicator for ThinkorSwim that you can use.
Follow the link, and copy the code into a new custom indicator on your ThinkorSwim platform.
IV Rank vs. IV Percentile
IV rank and IV percentile are ways options traders use to determine if a stock’s implied volatility is high or low compared to the past year.
However, there are some differences between the two that you should consider.
What is IV Rank?
IV rank compares the current implied volatility to the last 52 weeks. It is measured on a scale of 0-100, where 0 is the lowest IV over the previous 52 weeks, and 100 is the highest IV in the last 52 weeks.
How to Calculate IV Rank
To calculate the IV rank, you must find the range where implied volatility has traded over the last 52 weeks.
For example, let’s say a stock’s implied volatility ranged from 30% to 50% over the last 52 weeks.
If the implied volatility is currently at 40%, the IV rank is 50.
What is IV Percentile?
The implied volatility percentile measures the percentage of days a stock’s implied volatility is lower than its current level.
For example, if the IVP of a stock is 35%, 65% of the time over the last 52 weeks, the IV was higher.
What is Implied Volatility
Implied volatility is a way to measure how much a stock is expected to change in price in the future.
It is used to help calculate the price of options, and a stock with high implied volatility is expected to have bigger price changes and, therefore, higher option premiums.
A stock with low implied volatility is expected to have smaller price changes and lower option premiums. If you have any questions about using the IV rank on thinkorswim, feel free to join the HaiKhuu Discord and ask for help! Our community is available 24/7 and can’t wait to assist you in all of your trading needs. You should also explore the best thinkorswim indicators for more information!
Tastytrade Disclosure
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