# Is implied volatility highest at the money?

## Is implied volatility highest at the money?

The smile shows that the options that are furthest in the money (ITM) or out of the money (OTM) have the highest implied volatility. Options with the lowest implied volatility have strike prices at the money (ATM) or near the money. Not all options will have an implied volatility smile.

**What is at the money implied volatility?**

The implied volatility tends to be the lowest when an option is at or near the money and increases when the option moves further out of the money or in the money. Implied volatility is a factor that drives option pricing. The higher the implied volatility, the higher the option price is.

### Where can I find implied volatility rank?

IV rank can be found in 2 different places in the tastyworks trading platform. The first is on the trade page displayed in the image above inside of the orange circle. The other place it can be found is on the watchlist page.

**What is a good range for implied volatility?**

The first standard deviation is $10 above and below the stock’s current price, which means its normal expected range is between $40 and $60. Standard statistical formulas imply the stock will stay within this range 68% of the time (see Figure 1).

## How does implied volatility ( IV ) rank work?

Conversely, you might think that 20% is a low implied volatility level until I tell you that the stock is a low-volatility utility company that hardly moves 5% throughout a year. IV rank takes the highest and lowest levels of implied volatility over the trailing 52 weeks and ranks the current IV level relative to those highs and lows.

**What does forward implied volatility between two points mean?**

Forward implied volatility between two points is the ‘local volatility’ between (S, t) and (S, t+Δt). The generalization of this formula gives Dupire-Derman-Kani’s local volatility which is a function of time to expiry and option moneyness.

### When does implied volatility go up or down?

For options with a forward skew, implied volatility values go up at higher points along the strike price chain. At lower option strikes, the implied volatility is lower, while it is higher at higher strike prices.

**What is the underlying volatility of a forward start option?**

As per formula (2) you see that for a forward start option, the real underlying of the option is not ‘the stock’ itself but rather the future implied volatility σT1T2k, an information which is simply not encoded in a European vanilla option.