When it comes to options trading, there’s no metric quite as crucial as Implied Volatility Percentile (IV Percentile).

IV Percentile gauges the current implied volatility against a stock’s historical range of implied volatilities. It serves as a litmus test for where a stock stands in terms of market expectations.

To provide an illustration, let’s peek at Apple. By comparing its current implied volatility to past instances, we can assign Apple an IV percentile between 0 and 100%. The former implies subdued volatility, while the latter indicates a frenzy of market activity.

Earnings announcements often trigger spikes in implied volatility – a fact that savvy investors can leverage. To pinpoint stocks with sky-high implied volatility, screening tools like the Stock Screener offer a handy solution.

Utilizing the Stock Screener To Identify Volatility Standouts

With market volatility surging in recent weeks amid a flurry of earnings reports, several stocks stand out for their elevated IV Percentile.

By setting filters like Total Call Volume of 5,000, Market Cap exceeding 40 billion, and IV Percentile surpassing 70%, we unearth a lineup of top contenders:

• Dell Technologies (DELL)
• Emerson Electric Company (EMR)
• Palo Alto Networks (PANW)
• Zoetis Inc (ZTS)
• Fortinet (FTNT)
• Starbucks (SBUX)
• Amgen (AMGN)
• Advanced Micro Devices (AMD)
• Amazon (AMZN)
• Qualcomm (QCOM)

The comprehensive list also reveals each stock’s IV Percentile alongside their upcoming earnings dates.

Unpacking the Significance of IV Percentile

In the realm of options trading, a high IV percentile often favors strategies like iron condors, short straddles, and strangles.

Comparing a stock’s IV Percentile to the broader market enables investors to gauge its relative volatility. If overall market volatility is elevated, focusing on a single stock might not yield substantial returns. However, when the market’s IV percentile is low, seizing the opportunity to sell overpriced volatility in chosen stocks – like the ones mentioned – could pay dividends.

Keep a keen eye on upcoming earnings dates, as post-earnings price swings can play a pivotal role in option performance.

Exploring Iron Condor Strategies

Leveraging an iron condor screener for the aforementioned stocks can lend valuable insights into potential trading opportunities.

Let’s dive into the specifics of an iron condor trade using Amazon as a case study:

Setting the stage for an iron condor trade with a May 24 expiry involves executing a series of put and call options. Selling the $165 put and buying the $135 put, while on the calls side, selling the $195 call and purchasing the $225 call.

The trade’s price tag stands at $5.61, translating to a $561 credit into the trader’s account. With a maximum risk of $2,439, the trade offers a profit potential of 23.00% and a 66.4% probability of success.

The profit zone is delineated between $159.39 and $200.61, calculated by adjusting the short strikes with the premium received.

Remember, options are inherently risky, and investors could face a total loss of their investment. This article serves for educational purposes and not as a trading recommendation. Always conduct thorough due diligence and consult with a financial advisor before making investment decisions.