Volatility can be an option trader's best friend or worst enemy, depending on how it's approached.
High implied volatility percentile signals that options prices are elevated compared to their historical norms, creating unique opportunities for those who know how to capitalize on them.
Whether you're selling premium to take advantage of inflated option prices or seeking sharp price swings for directional trades, understanding which stocks have unusually high IV is crucial.
To get an accurate picture of stocks with a high implied volatility percentile, we can use the Stock Screener.
These elevated readings suggest the options market is pricing in significant potential price movements, whether due to upcoming earnings announcements, sector-specific developments, or broader market dynamics.
For traders considering volatility-based strategies, these stocks warrant particular attention as they may offer enhanced premium collection opportunities, though careful position sizing and risk management remain crucial.
Using The Stock Screener To Find High Volatility Stocks
With volatility spiking in recent days, we have 18 stocks showing an IV percentile above 80.
We can set the following filters using the Stock Screener to find stocks with a high implied volatility percentile.
- Total Call Volume 5,000
- Market Cap greater than 40 billion
- IV Percentile greater than 80%
This screener gives us the following stocks ranked from highest IV Percentile to lowest:
Merck & Company (MRK)
Lockheed Martin Corp (LMT)
International Business Machines (IBM)
Medtronic (MDT)
Morgan Stanley (MS)
Tesla (TSLA)
Bristol-Myers Squibb (BMY)
Unitedhealth Group (UNH)
Goldman Sachs Group (GS)
KKR & Company (KKR)
Here is the full list of stocks showing IV Percentile and earnings dates. In total there are 24 stocks that meet this scan criteria.
How To Use IV Percentile
Generally, when implied volatility percentile is high, focusing on short volatility trades such as iron condors, short straddles, and strangles is better.
It’s also a good idea to watch the upcoming earnings dates as stock can make big moves following earnings announcements.
Iron Condor Screener
Let’s run an iron condor screener for the above stocks and analyze the results.
Let’s look at the first line item on Merck & company.
Using the April 17 expiry, the trade would involve selling the $75 put and buying the $80 put. Then on the calls, selling the $90 call and buying the $95 call.
The price for the condor is $1.31 which means the trader would receive $131 into their account. The maximum risk is $369 for a Risk/Reward ratio of 2.82 to 1 with a loss probability of 38.2%.
The profit zone ranges between $78.69 and $91.31. This can be calculated by taking the short strikes and adding or subtracting the premium received.
IBM Iron Condor
Let’s take a look at another example, this time on IBM.
Using the May 16 expiry, the trade would involve selling the $225 put and buying the $220 put. Then on the calls, selling the $270 call and buying the $275 call.
The price for the condor is $1.55 which means the trader would receive $155 into their account. The maximum risk is $345 for a Risk/Reward ratio of 2.23 to 1 with a loss probability of 45.0%.
The profit zone ranges between $223.45 and $271.55. This can be calculated by taking the short strikes and adding or subtracting the premium received.
Good luck out there traders in this volatile market.
Please remember that options are risky, and investors can lose 100% of their investment. This article is for education purposes only and not a trade recommendation. Remember to always do your own due diligence and consult your financial advisor before making any investment decisions.
