Covered Call Screener: How to Find High Implied Volatility Stocks for the Best Premium This Week

The Short Answer: Where to Find High-IV Stocks Right Now

To find stocks with high implied volatility for covered calls, use a free options screener — CBOE's LiveVol, Barchart.com, or your broker's built-in scanner — and filter for stocks where IV Rank is above 50 and IV Percentile is above the 60th percentile. Those two numbers tell you whether today's implied volatility is high relative to that stock's own history, which is what actually matters when you're trying to collect fat premium.

High raw IV alone is not enough. A stock with 80% IV sounds exciting, but if that stock normally trades at 90% IV, the options are actually cheap right now. IV Rank and IV Percentile fix that problem by putting current IV in context. That's the filter serious covered-call sellers use before they look at anything else.

What Is Implied Volatility and Why Does It Drive Your Premium?

Implied volatility (IV) is the market's forward-looking estimate of how much a stock might move, expressed as an annualized percentage. It is backed out of live option prices using a pricing model. When IV is high, option buyers are paying more for protection or speculation, and that means you — the covered-call seller — collect more premium for the same strike and expiration.

The CBOE publishes the VIX, which measures implied volatility on S&P 500 index options. When VIX spikes, individual stock IVs usually rise too, making the whole market more favorable for premium sellers. The Options Industry Council (OIC) explains that IV is one of the six core inputs to an option's price, alongside stock price, strike price, time to expiration, interest rates, and dividends.

Practical rule: all else equal, a stock with 60% IV will pay roughly twice the premium of the same stock at 30% IV for the same strike and expiration. That's why screening for elevated IV before you pick a stock is step one, not step three.

IV Rank vs. IV Percentile: Which Number Should You Use?

IV Rank (IVR) answers: where does today's IV sit between the 52-week low and 52-week high? Formula: IVR = (Current IV − 52-week low IV) ÷ (52-week high IV − 52-week low IV) × 100. An IVR of 70 means current IV is 70% of the way from its annual low to its annual high.

IV Percentile answers: what percentage of trading days over the past year had IV lower than today? An IV Percentile of 80 means IV was lower than today on 80% of days in the past year.

Most experienced covered-call traders prefer IV Percentile because it is not distorted by a single spike. If a stock had one massive earnings gap that pushed IV to 200% for two days, that event inflates the 52-week high and makes IVR look artificially low for the rest of the year. IV Percentile smooths that out.

Target zone for covered-call selling: IVR above 50 OR IV Percentile above 60. Either signal is a reasonable entry trigger. Both together is better.

Step-by-Step: Building Your Weekly Screener in Under 10 Minutes

Step 1 — Start with stocks you already own or are willing to own. Covered calls require you to hold 100 shares per contract. FINRA Rule 4210 and standard broker margin rules require the shares to be in your account before or at the time you sell the call. Never screen for IV first and then buy a stock just to sell calls on it without understanding the underlying business.

Step 2 — Open your screener. Free options: Barchart.com (Options > Unusual Options Activity or Screener tab), CBOE's LiveVol Express, or the options scanner inside TD Ameritrade/Schwab's thinkorswim, Tastytrade, or Interactive Brokers.

Step 3 — Apply these filters: • IV Rank > 50 • IV Percentile > 60 • Average daily options volume > 500 contracts (liquidity check) • Bid-ask spread on the at-the-money call < $0.15 (keeps your fill cost low) • Stock price > $20 (very cheap stocks have wide spreads and low absolute premium)

Step 4 — Sort the results by IV Percentile, highest first. Scan the top 20 names. Cross off anything with earnings in the next 14 days unless you specifically want an earnings-driven premium play (more on that risk below).

Step 5 — For each candidate, check the 30-day at-the-money call premium as a percentage of the stock price. Divide the call mid-price by the stock price. Anything above 3% for a 30-day call is strong. Above 5% is very high and warrants extra scrutiny of why IV is elevated.

Worked Example: Selling a Covered Call on NVDA in a High-IV Week

Let's say NVDA is trading at $875 per share. Your screener shows IV Rank at 68 and IV Percentile at 74 — both above the target thresholds. There are no earnings in the next 30 days.

You look at the options chain for the expiration 28 days out. The $900 strike call (roughly 3% out of the money) has a bid of $18.20 and an ask of $18.60. The mid-price is $18.40.

Premium yield: $18.40 ÷ $875 = 2.1% in 28 days, or roughly 27% annualized if you could repeat this every month (you cannot always, but it benchmarks the opportunity).

Delta on the $900 call is approximately 0.32, meaning the market implies about a 32% chance the call finishes in the money and your shares get called away at $900.

Breakeven on the downside: $875 − $18.40 = $856.60. If NVDA drops below $856.60 at expiration, you lose more on the stock than you collected in premium. That's your real risk, not the call itself.

Max gain scenario: NVDA closes at or above $900 at expiration. You keep the $18.40 premium and sell shares at $900, for a total gain of $18.40 + $25 (price appreciation from $875 to $900) = $43.40 per share, or 4.96% in 28 days.

This is a clean, liquid, high-IV setup. The math is transparent before you place the trade.

The Risks You Need to Know Before You Chase High IV

High IV is not free money. Here is why it can hurt you.

Risk 1 — IV is high for a reason. Stocks with elevated IV usually have a known catalyst: earnings, an FDA decision, a legal ruling, a macro event. If that catalyst resolves badly, the stock can drop far more than the premium you collected. A $20 premium does not protect you against a $100 drop.

Risk 2 — Earnings volatility crush. If you sell a covered call over an earnings date, IV will collapse after the announcement (this is called a volatility crush). That sounds good for the seller, but if the stock gaps down 15% on bad earnings, the premium you collected rarely covers the loss. Many experienced traders avoid holding covered calls through earnings entirely.

Risk 3 — Capped upside. If NVDA jumps from $875 to $950 after a positive announcement, your shares get called away at $900. You miss $50 per share of gains above the strike. The OIC calls this the opportunity cost of the covered call strategy. It is real and it compounds over time in a strong bull market.

Risk 4 — Tax treatment. In the US, the IRS treats premiums received from covered calls as short-term capital gains in most cases. Selling an in-the-money call can also suspend the holding period on your shares, potentially converting a long-term gain into a short-term gain. IRS Publication 550 covers this in detail. Canadian investors should note that the CRA has specific rules on option premiums and adjusted cost base — consult a tax professional before your first trade.

Risk 5 — Liquidity risk. Stocks that show up on unusual-options-activity scanners sometimes have wide bid-ask spreads. Always check the spread before entering. A $0.50 spread on a $5 premium means you're giving up 10% of your income just on the fill.

Quick Reference: Screener Settings to Save This Week

Use this as your repeatable weekly checklist every Monday morning before the market opens.

• IV Rank > 50 AND IV Percentile > 60 • No earnings within 14 days • Options volume (30-day average) > 500 contracts/day • Bid-ask spread on ATM call < $0.15 • Stock price > $20 • Delta on target strike: 0.20–0.35 (out-of-the-money, but not too far out) • Days to expiration: 21–45 days (the sweet spot for theta decay, per standard OIC guidance on time value) • Premium yield target: > 1.5% of stock price for the period

Run this filter on your existing holdings first. If none of your current positions clear the IV threshold, that is useful information — it means the market is not pricing in much movement in your stocks right now, and premium will be thin. Forcing a trade in a low-IV environment just to generate income is one of the most common mistakes new covered-call sellers make.

Review your screener results weekly, not daily. Chasing IV spikes intraday leads to poor strike selection and overtrading. Set your entries at the start of the week, let theta work, and manage at expiration.

What IV rank is good for selling covered calls?

Most covered-call traders look for an IV Rank above 50, which means current implied volatility is in the upper half of its 52-week range. An IV Rank above 70 is considered high and typically offers strong premium relative to recent history. Below 30, premium is usually too thin to justify the trade unless you have another reason to sell.

Which free screener is best for finding high implied volatility stocks?

Barchart.com and the CBOE's LiveVol Express are the most commonly used free tools for IV screening. Most major brokers — including Schwab/thinkorswim, Tastytrade, and Interactive Brokers — also include IV Rank and IV Percentile filters in their built-in options scanners at no extra cost. Start with whatever platform you already use before paying for a third-party tool.

Should I sell covered calls before earnings to get the high IV premium?

Selling covered calls into earnings captures elevated IV, but it carries significant risk because a large gap down on bad earnings can far exceed the premium collected. Many experienced traders avoid holding covered calls through earnings announcements for exactly this reason. If you do sell into earnings, use a strike well above the current price and size the position conservatively.

How do I know if the bid-ask spread is too wide on a covered call?

A general rule is to avoid any covered call where the bid-ask spread exceeds 10% of the option's mid-price, or more than $0.15 on lower-priced options. Wide spreads mean you give up a meaningful portion of your premium just getting into and out of the trade. Stick to liquid underlyings with average daily options volume above 500 contracts.

Does selling covered calls on high-IV stocks affect my taxes?

Yes. The IRS treats most covered-call premiums as short-term capital gains regardless of how long you have held the stock. Selling an in-the-money covered call can also suspend your stock's long-term holding period under IRS Publication 550 rules, which could convert a long-term gain into a short-term gain if the shares are called away. Canadian investors should check CRA guidance on option premiums and adjusted cost base, and both US and Canadian traders should consult a tax professional.

What delta should I target when selling a covered call on a high-IV stock?

A delta between 0.20 and 0.35 is the most common target range for covered-call sellers, representing a roughly 20–35% probability that the call finishes in the money. Higher IV environments let you go further out of the money while still collecting meaningful premium, so you may find 0.20-delta strikes paying 2% or more in a high-IV week. Lower delta means less chance of assignment but also less premium collected.