How to Screen for Options IV vs Historical Volatility | Trading Opportunities & Insights




How to Use Market Chameleon's Options Screener to Compare Implied Volatility vs. Historical Volatility

In the world of options trading, understanding volatility is key to evaluating potential opportunities. Whether you're a seasoned trader or just beginning to explore options strategies, being able to compare implied volatility (IV) vs. historical volatility (HV) can offer valuable insights into whether options contracts may be overvalued or undervalued. Market Chameleon's Options Screener provides a powerful way to analyze these volatility metrics, helping you refine your strategy and make more informed decisions.

Why Compare Implied Volatility vs. Historical Volatility?

Implied volatility reflects the market’s expectations for future price movements, while historical volatility measures how much the underlying stock has actually moved over a past period. By comparing these two metrics, you can identify discrepancies that might indicate potential trading opportunities:

  • High IV vs. HV: If implied volatility is significantly higher than historical volatility, options may be relatively expensive. Some traders consider this a potential opportunity for selling strategies, such as writing covered calls or selling spreads.

  • Low IV vs. HV: If implied volatility is much lower than historical volatility, options may be underpriced. This could suggest a potential opportunity for buying strategies, such as purchasing calls or puts to capitalize on a possible increase in IV.

Navigating the Market Chameleon Options Screener

The Market Chameleon Options Screener makes it easy to analyze implied and historical volatility across different expiration dates, helping you identify contracts that meet your specific criteria. You can access the tool here: Market Chameleon Options Screener.

Step-by-Step Guide to Using the Screener

  1. Access the Options Screener

    • On the Market Chameleon platform, navigate to the Options Screener section and select “Options by Expiration.”

  2. Set Your Filters

    • The screener offers a variety of filters to narrow down your search. Some key ones include:

      • Option Volume – Filter for actively traded contracts to ensure liquidity.

      • IV vs. HV Comparison – Identify options where IV significantly diverges from HV.

      • Expiration Date – Focus on specific expirations based on your trading strategy.

      • IV Change % – Spot contracts where implied volatility is increasing or decreasing sharply.

  3. Analyze Key Data Points

    • Once your filters are applied, the screener presents a detailed table with key metrics, including:

      • Stock Symbol & Name – Identifies the underlying asset.

      • Stock Price & % Change – Shows the stock’s current price and daily movement.

      • At-the-Money (ATM) Implied Volatility – Displays the IV for the most relevant strike price.

      • 20-Day & 1-Year Historical Volatility – Provides short-term and long-term realized volatility figures.

      • % Difference (IV vs. HV) – Highlights how IV compares to historical volatility.

  4. Sort & Compare Results

    • Click on column headers to sort by highest or lowest IV, HV, or % differences to quickly spot potential opportunities.

    • Look for contracts with high trading volume and significant IV vs. HV discrepancies.

Interpreting the Data for Smarter Trading Decisions

The real power of the Options Screener lies in its ability to surface patterns that you might not have otherwise noticed. Here are a few insights you can extract:

  • High IV & Increasing Volume: A rising IV alongside high option volume could indicate growing interest in a particular expiration, suggesting that traders are expecting increased future volatility.

  • IV Above Historical Volatility by 25% : If implied volatility is significantly higher than long-term HV, it may suggest options are relatively expensive compared to past stock movements.

  • Low IV but Trending Up: Options that currently have low IV but are starting to rise could present opportunities if you believe volatility will continue to increase.

Key Takeaways

? The Market Chameleon Options Screener helps traders efficiently compare implied volatility vs. historical volatility to evaluate option pricing. ? The ability to filter by IV, HV, volume, expiration, and IV change provides valuable insights into market conditions. ? While the screener is a great starting point, it’s important to conduct further research before making trading decisions.

Final Thoughts

Understanding volatility is an essential skill for options traders, and Market Chameleon’s Options Screener provides an intuitive way to analyze these critical metrics. By using this tool to screen for IV vs. HV discrepancies, you can better evaluate potential risk and reward scenarios and refine your trading strategy accordingly.

Start exploring the Market Chameleon Options Screener today: https://marketchameleon.com/Screeners/Options

Financial Disclosure

This blog is for informational purposes only and does not constitute financial, investment, or trading advice. Market Chameleon, its affiliates, and the authors are not investment advisors or broker-dealers. Always conduct your own research and consult with a licensed financial professional before making any trading decisions.