IV Rank Thinkorswim Scanning and Analysis

Thinkorswim's IV Rank is a powerful tool that helps traders identify overbought and oversold conditions in the market. The IV Rank is based on the Implied Volatility (IV) of a stock, which is a measure of the market's expectation of a stock's price movement.

The IV Rank uses a scale of 1-100 to measure IV, with 1 being the lowest and 100 being the highest. A low IV Rank indicates that the market is relatively calm, while a high IV Rank indicates that the market is volatile. Thinkorswim's IV Rank is based on the average IV of the last 30 trading days.

Thinkorswim's IV Rank is useful for identifying potential trading opportunities, such as breakouts or reversals. By monitoring the IV Rank, traders can anticipate when a stock is likely to move sharply in either direction.

Calculating IV Rank is a straightforward process that involves determining the range implied volatility has traded between the last 52 weeks.

The range of implied volatility is typically between 20% and 40% over the previous 52 weeks.

To calculate the IV rank, you need to figure out where the current implied volatility falls within this range.

The IV rank is calculated as 50 if the current implied volatility is at the midpoint of the range, which is 30% in our example.

To calculate IV rank, you'll need to know the current level of implied volatility, the lowest value it has been in the last year, and the highest value it has been.

The lowest value of implied volatility in the last year is called IV Low, and the highest value is called IV High.

You can calculate IV rank using the formula (Current IV – IV Low) / (IV High – IV Low) * 100.

This formula will give you a percentage that indicates how far into the historical range of IV the current value of IV is.

For example, if the current IV is 30%, IV Low is 20%, and IV High is 40%, the IV rank would be (30 – 20) / (40 – 20) * 100 = 50.

This means that the current implied volatility is exactly at the midpoint of the historical range.

Thinkorswim does not have a default indicator for IV rank, but you can add a custom IV rank indicator using the code from the tastytrade brokerages.

The IV rank and IV percentile readings of AAPL stock on thinkorswim and tastytrade at the same time are quite different, so it's best to stick to one platform or the other.

Here's a comparison of the IV rank and IV percentile readings of AAPL stock on both platforms:

In thinkorswim, you can also scan for stocks with high IV rank/IV percentile using the built-in stock scanner.

You can add the IV percentile study to the scan filter by going to the Scan tab, adding a filter, and selecting volatility -> IV_percentile.

If you use thinkorswim to trade options, you may realize there is no default indicator for IV rank. However, thinkorswim does have IV percentile by default, which is similar but not exactly the same as IV rank.

You can add a tastytrade IV rank custom indicator to thinkorswim by using the code at the bottom of this article. This allows you to see IV rank on thinkorswim, but keep in mind that the exact readings on thinkorswim and the tastytrade brokerages do not match.

Here's a comparison of the IV rank and IV percentile of AAPL stock on both platforms:

The default IV percentile option essentially matches the reading of the custom tastytrade indicator. However, adding the custom indicator isn't of much benefit unless you want to see it plotted on a chart.

The key takeaway is that stressing over these exact IV numbers is pointless. Instead, simply stick to one platform or the other, so that you are not comparing apples to oranges when comparing the IV of different stocks.

You can scan for implied volatility rank in thinkorswim using the built-in stock scanner. To do this, follow these steps: scan tab -> add filter -> volatility -> IV_percentile. This will allow you to discover stocks with high IV rank/IV percentile.

The IV percentile is a measure of how far a stock's price moves away from its average, and it's a component of the Black-Scholes model used to determine option prices. The higher the IV percentile, the riskier the stock is.

You can also use a custom IV rank indicator in thinkorswim by using the code provided in the article. However, the exact readings on thinkorswim and the tastytrade brokerages do not match, so it's best to stick with one platform or the other.

Here's a comparison of the IV rank and IV percentile readings of AAPL stock on both thinkorswim and tastytrade:

As you can see, the IV rank and IV percentile are quite different between the two platforms, so it's best to choose one and stick with it.

You can add a custom IV rank indicator to thinkorswim by using the code provided in the article, which will allow you to track the IV rank of a stock.

The IV rank is a measurement used by options traders to determine how the current implied volatility of a stock compares to the last 52 weeks. It's measured on a scale of 0-100, with 0 being the lowest IV in the past year and 100 being the highest.

The IV rank can be used to determine if implied volatility is high or low compared to what it usually trades at. Generally, you should sell options with high IV to take advantage of the elevated premiums.

To add the IV rank indicator to thinkorswim, follow the steps outlined in the article, which include deleting the default code and pasting in the custom code.

The IV rank indicator can be used in conjunction with other indicators to help make trading decisions. For example, you can use it in combination with the IV percentile to get a better sense of the volatility environment.

Here are some key differences between IV rank and IV percentile:

The IV percentile can be misleading at times, especially when IVR looks low but IV% tells us there is something to sell. This is because IVR can be affected by outliers, whereas IV% gives a more accurate picture of the volatility environment.

By using the IV rank indicator in conjunction with other indicators, you can get a more complete picture of the volatility environment and make more informed trading decisions.