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If you’ve been following the market lately (most at Slope have) you’ve probably noticed a key shift: implied volatility (IV) has spiked across the board. Yesterday, I touched on how this high-volatility environment presents a window of opportunity for options traders—not by buying options, but by selling them.
Let’s walk through why that is and what the data is telling us.
The IV Rank Tells the Story
The chart below highlights just how elevated implied volatility is today, especially when compared to the last decade. One of the key tools I use is IV Rank, which measures how current implied volatility compares to its range over the past year.
- When IV Rank is below 25%, premiums are typically low—meaning selling options is less attractive.
- When IV Rank is above 35%, it starts to get interesting.
- But when we’re in the pale green zone or higher, that’s when premium-selling strategies go from “interesting” to “compelling.”
Right now, IV Rank in the S&P 500 (SPY) isn’t just elevated—it’s pinned near the top. In other words: this is an ideal time for premium sellers.
A quick scan of IV Ranks across the most liquid ETFs shows widespread elevation—precisely the kind of environment that favors options-selling strategies.
Why I Stick with Premium-Selling Strategies
I’ve been selling options for more than two decades. And while I occasionally use debit spreads for directional trades, the backbone of my approach is built on high-probability, premium-selling strategies. Why? Because they give me a statistical edge. Every. Single. Trade.
When volatility spikes, that edge expands. Premiums rise. Market participants get fearful. And the marketplace starts offering outsized rewards for those willing to take on risk in a disciplined, structured way.
This is where premium-selling shines.
A Side-by-Side Look at Options Premium in Different Volatility Environments
Let’s dig into two historical examples to make this more tangible. We’ll look at SPY options chains roughly 50 days from expiration—one during a low-volatility environment and another during a high-volatility one.
📉 August 30, 2018
- VIX: 13.53
- SPY Price: $290.30
- Premium: ~$4.20–$4.25
- Extrinsic Value: $3.93
This was a low-volatility environment. The market was calm, and premiums were modest.
📉 April 10, 2025
- VIX: 40.74
- SPY Price: $524.58
- Premium: ~$18.50–$18.60
- Extrinsic Value: $18.84
On the other hand, we are now in a high-volatility environment. The difference in premium is staggering—even accounting for the higher SPY price. That’s because extrinsic value—the portion of an option’s price above its intrinsic value—rises as volatility rises. It’s a direct result of market uncertainty being priced in.
This isn’t a rare outlier. It’s how options pricing works. And it’s why option sellers are paid handsomely to step in during turbulent markets.
The Case for a New Volatility Regime
It’s not just a blip. Since the COVID crash in 2020, we’ve entered what could very well be a new volatility regime—one where elevated IV is more common, not the exception.
For years leading up to the pandemic, markets were lulled into complacency. Volatility stayed subdued, and opportunities to sell rich premium were harder to find.
That’s changed.
We may be in the early innings of a bull market in volatility. And that means we’re also entering a golden era for traders who know how to structure risk-defined, high-probability trades that take advantage of inflated premiums.
If you’re serious about options trading I’d encourage you to subscribe to my free weekly newsletter, The Option Premium. Each week, I break down actionable strategies, trade setups, and educational insights grounded in 20+ years of professional options trading experience.
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—Andy
