IV Percentile shows the percentage of days the current Implied Volatility has been above or below the current value. In the chart below, we can see the IV Percentile for $VRX is 72%.
$VRX current Implied Volatility is 104 as shown above. Using this chart as an example, we can see that over the past 52 weeks the Implied Volatility for $VRX has been below 104 for 72% of the days leading up to this moment. The higher the IV Percentile the better.
As Premium sellers you want to look for stocks, ETF’s and Indexes that are currently experiencing high levels of volatility. When you encounter a stock with an IV Percentile of 80% or above, it shows the stocks is experiencing unusually high levels of volatility.
By default the above IV Percentile is not available in TOS. To add the IV Percentile indicator as shown on the chart above checkout the Implied Volatility article for setup instructions.