(and How to Take Advantage)
We’re not in a crisis, but volatility is quietly making a comeback—and for options traders, that matters.
Traders are being reminded—some gently, some with a jolt—that volatility never dies. It merely hides. And now, after a prolonged hibernation, it’s stirring.
For nearly two years, the market lulled investors into comfort with a slow, steady grind higher. The VIX drifted. Spreads narrowed. Option premiums dried up. Selling premium in 2023 felt like wringing water from a stone—you could do it, but not without effort. But something changed in late Q4 last year. And since then, the shift has become increasingly hard to ignore.
Rising interest rate uncertainty. Sticky inflation. Fragile geopolitics. Increasing dispersion in sector performance. Trade wars. Call it the perfect storm—or just the market being the market. Either way, the outcome is clear: implied volatility has returned across asset classes. And for options traders who understand time decay and probability, that’s a welcome development.
A Structural Shift Beneath the Surface
Since the start of the year, the VIX has comfortably rebased above 15 (red line below), with bursts into the 20s. That might not seem like much to the casual observer, but context is everything. From 2013 to 2019, the VIX rarely stayed above 20 for long. After the pandemic, the range shifted higher—but complacency eventually returned.
Now, something’s different.
IV rank—one of the most useful tools in an options trader’s toolbox—is showing signs of structural elevation in major underlyings like SPY, QQQ, IWM, and numerous ETFs and equities.
IV Rank – S&P 500 (SPY)
But this time, it’s not fear that’s driving volatility—it’s uncertainty. And that’s a key difference. Fear tends to spike and fade quickly. Uncertainty, on the other hand, lingers. It’s not based on panic, but on the market’s inability to confidently price a wide range of possible outcomes. That makes it more persistent, more complex, and ultimately more valuable for options sellers.
When Premium’s Plentiful, Sell It
Let’s be clear: this isn’t a prediction of doom. It’s an observation of opportunity.
High implied volatility doesn’t mean stocks are about to crash. It means the expectation of movement—real or imagined—is rising. And that expectation fuels options pricing and, well, the expected move.
For options traders who lean on options selling strategies, this is the moment we wait for. I rarely chase home runs with long calls or far-out-of-the-money bets. My edge lives in the quiet math of probability, in theta decay, and in identifying moments when the market is simply mispricing risk.
Selling premium—whether through credit spreads, iron condors, strangles, poor man’s covered calls or naked puts—isn’t about being right on direction. It’s about understanding that overpriced fear or uncertainty eventually fades.
Volatility Is Not Your Enemy
When volatility returns, the instinct is often to retreat, to tighten up, to wait for things to “settle down.” But what looks like chaos on the surface is often where the best risk-adjusted opportunities live—if you know what you’re doing.
What we’re witnessing in 2025 is more than just a spike in volatility—it could be the start of a volatility regime shift.
For premium sellers, that means the playbook is wide open.
What’s Different Now?
Why Today’s Volatility Is Different (and How to Take Advantage)
Back in 2020, volatility surged because the market was in crisis.
Markets were blindsided. COVID triggered a chain reaction no one was prepared for. Stocks fell off a cliff, the global economy slammed on the brakes, and traders rushed to hedge what felt like unhedgeable risk. Option premiums skyrocketed because the fear was immediate, real, and justified. Everyone was flying blind—and paying up for protection.
Today’s volatility is different.
We’re not in a crisis. We’re not reacting to a single major event. Instead, the market is dealing with something more complicated: ongoing, hard-to-define uncertainty.
It’s no longer about short-term surprises—it’s about long-term uncertainty.
Markets aren’t reacting to single events anymore. They’re trying to price in complex, ongoing risks that don’t have clear answers. And that’s what’s keeping volatility elevated.
And for options traders—especially premium sellers—that distinction is a big deal.
We’re in a new volatility regime. One where volatility doesn’t need a major news event to spike. It just stays elevated because markets are unsure about what comes next. It’s not panic—it’s a slow, steady recalibration.
The Hidden Gift of Volatility: Leverage Without Leverage
In low-volatility environments like 2018—when SPY was around $270 and the VIX hovered near 10—options were cheap, and collecting meaningful premium often meant selling closer to the current price. For example, a $260/$255 put credit spread (just ~4% out-of-the-money) might yield only $44 in premium while risking $456, offering a tight break-even and modest 9.6% return on risk. The low implied volatility compressed reward-to-risk, and left traders with limited flexibility in strike selection or trade structure. You were often forced to accept lower returns or take on more directional risk just to get paid.
Fast forward to 2025: SPY is around $525 and VIX is slightly elevated near 22. That same type of $5-wide spread—now placed much further out-of-the-money at $490/$485 (~7% below the market)—can generate $60+ in premium while risking about the same $440. With higher implied volatility, the market is pricing in more uncertainty, so sellers can position further from the market, enjoy wider breakevens, higher premiums, and better return on risk—all without increasing capital exposure.
This is the true advantage of high-IV environments: more premium, more flexibility, and a larger margin for error. For options sellers, it’s the kind of regime that makes strategies like credit spreads not just viable, but powerful.
That’s the advantage of leverage without using leverage. You’re not increasing your capital at risk. You’re just selling further from the money, with a greater probability of profit—because the market is paying more for the same amount of perceived risk.
Why This Matters for Options Sellers
This is where high IV can compound your edge. You’re not changing your process—you’re just operating in a more favorable environment:
- More distance from the market price means better protection against normal volatility.
- More premium means smaller trades can still generate meaningful returns.
- More flexibility means you can build diversified positions across tickers and expiration cycles.
For traders focused on selling premium—credit spreads, iron condors, naked puts, strangles—this environment rewards discipline, not aggression.
And over time, this builds confidence—not just in your positions, but in your process.
And for those of us who sell premium for a living, this is the part of the cycle where we build equity—not just in our portfolios, but in our confidence.
Elevated IV Enhances Your Edge—But Execution Still Matters
Higher implied volatility opens the door to better opportunities, but success still depends on how you trade, not just when you trade.
Even in a favorable volatility environment, premium selling is only as effective as the process behind it. Elevated IV makes the math more attractive—it widens breakevens, increases credit, and allows you to take positions further from the current price. But it doesn’t replace core trading principles.
Here’s what remains essential:
✅ Discipline
One of the biggest challenges in a high-IV market is the temptation to overtrade.
Just because premium is rich doesn’t mean every setup is worth taking. Staying selective—waiting for the right IV rank, clear technical levels, or clean market structure—helps avoid unnecessary risk. Especially when markets are choppy or headline-driven, patience is a skill that pays.
✅ Risk Management
High-IV environments often come with fast moves and unexpected swings. It’s critical to:
- Use defined-risk trades when appropriate (like credit spreads over naked options, especially on high-beta stocks).
- Diversify across tickers and expirations to reduce correlation risk.
- Avoid oversizing positions, even when premiums are tempting.
Selling premium should be about consistency, not maximizing any single trade.
✅ A Repeatable Framework
High IV is only an edge if your trading process is structured.
That means using tools like:
- IV rank and IV percentile to gauge whether options are relatively expensive
- Delta to position trades based on probability, not guesswork
- Expected move to help determine where to place strikes and assess risk
- Technical context to filter for areas of support/resistance or overbought/oversold extremes
The goal is to reduce subjectivity. Having a framework allows you to act consistently—even when the market is noisy.
In my next article (out later this week), I’ll walk through one of my favorite high-IV strategies—designed specifically to thrive when volatility is elevated—and how to implement it with discipline and a clear, risk-defined plan based on probabilities.
As someone who’s been part of the Slope community for a long time, I know how difficult it is to find an options newsletter that’s focused on substance instead of sales tactics.
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— Andy Crowder
Probabilities over predictions
