Implied Volatility (IV) Chart User Guide
The Implied Volatility Chart displays a stock’s 1 month and 2-4 months implied volatility.
Access to this application is only reserved only to our OptionEasy and OptionEasy Bootcamp members.
How to Use the Implied Volatility (IV) Chart
Usage of this tool is pretty straightforward.
Simply key in your stock ticker into the implied volatility search box and hit Enter.
The 1 year implied volatility data on the stock will then be displayed.
To focus on a particular time frame, simply select your preferred zoom options at the bottom right corner of the chart.
The little red bell icons at the bottom of the chart indicate the stock’s earnings date. Click on the bell icons for more information about the stock’s earnings.
Understanding the Implied Volatility (IV) Chart
Implied volatility (IV) is an essential ingredient to options prices. The profitability of an option trade or strategy can be significantly affected by changes in implied volatility. In general, options traders want to buy options when IV is low and sell options when IV is high.
Implied volatility, like everything else, moves in cycles. High-volatility periods will result in peaks in implied volatility while low-volatility will result in troughs in implied volatility. These high-volatility periods are generally followed by low-volatility periods and vice versa. Therefore, you should expect to see ups and downs in a stock’s implied volatility chart.
Our IV chart application helps you to easily identify the peaks and troughs in a stock’s implied volatility. Options are generally more expensive when IV peaks. This makes it more difficult to find cheap or reasonably priced options to buy.
Note that short term implied volatility will be higher at high volatility periods and lower at low volatility periods. This produces bigger fluctuations in the stock’s 1-month IV in comparison to the 2-4 months IV on the Implied Volatility Chart. It also indicates that shorter-term options tend to be more volatile compared to longer-term options.
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