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If you’re trading options and not paying attention to implied volatility, you’re only seeing half the picture.
Most traders think about IV in terms of earnings spikes or headline-driven fear — but there’s a lot more going on under the surface. Rising IV isn’t just about news or macro events. It’s the market’s way of saying something’s coming — and it’s not always what you think.
Not All IV Is Created Equal
Let’s be clear…
Just because implied volatility is going up doesn’t mean you should fade the move or rush into credit spreads. Rising IV might mean a sell-off is coming, sure — but sometimes it’s a setup for a breakout. The trick is understanding why the IV is climbing and where it’s climbing.
If front-month contracts are pumping while back months are flat, that’s often tied to a specific event — earnings, Fed day, CPI. But if the whole curve is lifting? That’s a different story. That usually signals broader uncertainty, and the market’s starting to price in a more extended move. Direction might not be clear, but the odds of range expansion just went up.
How I Trade It
I don’t just look at rising IV — I pair it with price. If a stock’s IV is climbing while the chart’s coiling in a tight flag or wedge, that gets my attention. It means traders are loading up on premium because they know something’s going to break — and soon.
That’s where the best directional opportunities come from.
But if the stock’s already moved and the IV’s just catching up? That’s late. I want to be in before the IV surge — not after. Timing matters more than most people realize.
Bottom line: IV is a signal, not a trigger. Use it as a clue, not a reason to trade by itself. When you combine it with price, volume and structure, it becomes one of the most powerful edges in the market.
You just have to know how to listen.
Kane Shieh
Kane Shieh Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. First, This Signal, Then This Move
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