How I Decide Whether to Buy or Sell Options Premium
IV Rank (IVR) measures where a stock's current implied volatility sits relative to its own range over the past 52 weeks
6/13/20261 min read
How I Decide Whether to Buy or Sell Options Premium
One of the most common mistakes retail options traders make is picking a strategy before looking at volatility. I do it the other way around — IV Rank tells me the strategy, not my directional bias.
Here's the simple framework I use:
IV Rank below 35% → Options are cheap relative to their own history. This is when I buy calls. Paying for extrinsic value makes sense when vol is compressed. I target delta 0.40–0.55 with 45–90 DTE to give the trade room to develop without getting eaten by theta.
IV Rank above 35–40% → Options are expensive. This is when I sell premium — either Cash Secured Puts (CSPs) or Covered Calls. I target delta 0.20–0.30 at 21–35 DTE, collecting inflated premium and letting time decay work in my favor.
The 35–40% zone is a gray area. When momentum signals are strong (more on that in another post), I'll lean toward buying. When momentum is flat or uncertain, I default to selling premium.
The data source matters. I pull IV Rank from Barchart and cross-reference with Market Chameleon's summary for each ticker before making a decision. Two data points, one routing decision.
This is educational content only, not financial advice. All trading involves risk.
