Finding good stocks to sell options on is a systematic process, not a guessing game. You need high implied volatility, solid liquidity, tight spreads, and no upcoming landmines. Here's exactly how to screen for them.
What Are IV Rank and IV Percentile — and Why Do They Matter?
Raw implied volatility numbers are useless in isolation. AAPL at 30% IV might be screaming high, while MARA at 70% IV might actually be on the low end. That's where IV Rank and IV Percentile come in.
IV Rank measures where current IV sits relative to its 52-week high and low:
IV Rank = (Current IV - 52-Week Low IV) / (52-Week High IV - 52-Week Low IV) × 100
If AAPL's IV ranged from 18% to 42% over the past year and current IV is 33%, the IV Rank is (33 - 18) / (42 - 18) × 100 = 62.5. That means IV is in the upper portion of its recent range — good for selling.
IV Percentile measures what percentage of days in the past year had *lower* IV than today. An IV Percentile of 80 means IV was lower than today's level on 80% of trading days.
Which one matters more? IV Rank is more useful for selling decisions. A single IV spike (like an earnings reaction) can skew IV Percentile high for months, but IV Rank adjusts more quickly. Most professional premium sellers primarily watch IV Rank.
What IV Rank Range Should You Target for Selling?
The sweet spot for selling options is an IV Rank above 30. Here's the breakdown:
| IV Rank | Signal | Action |
When IV Rank is above 50, you're selling options at a significant markup compared to where they usually trade. That's edge. When it's below 15, you're selling cheap insurance — no edge there.
One caveat: IV Rank above 80 deserves extra scrutiny. IV is usually that high because something is happening — pending earnings, FDA decisions, litigation, a takeover rumor. Make sure you know *why* before selling into it.
Free Screening Methods That Actually Work
You don't need a $200/month data terminal to find high-IV stocks. Here are three free (or nearly free) approaches:
OptionsPilot's Screener
OptionsPilot's options screener lets you filter specifically for covered call and cash-secured put opportunities. It surfaces stocks with elevated premiums, shows you the annualized return at different strike prices, and flags upcoming earnings. If you're selling options for income, this is built specifically for that workflow.
Barchart's Options Screener
Barchart offers a solid free options screener. You can filter by IV Percentile (they use percentile rather than rank), volume, and open interest. The free tier gives you enough to build a weekly watchlist — sort by IV Percentile descending, then manually check the top 20-30 tickers against your other criteria.
Manual Screening with Watchlists
Build a master watchlist of 40-60 liquid, optionable stocks across sectors. Every week, check IV Rank on each one. This sounds tedious, but after a few weeks you develop intuition for which names cycle between high and low IV. Stocks like AMD, TSLA, META, and COIN tend to have wide IV swings — great for timing your entries.
Beyond IV: The 4 Other Filters That Matter
High IV alone doesn't make a good options-selling candidate. You need all five boxes checked:
1. Liquidity — Open Interest Above 500
Check that the specific strikes you'd sell have open interest of at least 500 contracts. Below that, you'll face wider spreads and slippage. For weeklies, look for open interest above 1,000 on the strikes near your target delta.
The easiest proxy: if the stock has options volume above 10,000 contracts daily, the individual strikes will generally be liquid enough.
2. Tight Bid-Ask Spreads
This is where most beginners bleed money without realizing it. If you're selling a put with a $2.50 bid and $3.00 ask, you're giving up $0.50 in edge right at entry — that's 20% of your premium gone.
Target: Bid-ask spread under 5% of the mid-price. On a $3.00 option, the spread should be $0.15 or less. Stocks like SPY, AAPL, MSFT, and QQQ regularly have spreads of $0.01-$0.05. Small-cap names might have spreads of $0.50-$1.00 — stay away from those for premium selling.
3. No Upcoming Binary Events
Binary events — earnings, FDA decisions, FOMC if it's a rate-sensitive stock, analyst days — create a specific kind of risk that IV doesn't fully compensate for. The stock could gap 15% overnight, and that short put you sold at 0.20 delta is suddenly deep ITM.
Rule: Don't sell options through earnings unless it's a deliberate earnings play and you've sized accordingly. Check the earnings calendar before every trade.
4. Reasonable Fundamentals
You're selling puts on this stock, which means you might end up owning it. Would you actually want to own 100 shares at the strike price? If the answer is "absolutely not," don't sell the put.
For covered calls, similar logic: do you believe in the stock at current levels? Selling calls on a position you think is about to crater is just delaying the inevitable — and the $1.50 in premium won't matter when the stock drops $15.
The Complete Stock Screening Workflow
Here's the exact process I run every Sunday evening. Takes about 30 minutes:
Step 1: Filter for IV Rank above 30. Pull up your screener of choice and sort by IV Rank (or IV Percentile above 50th). This usually gives you 80-150 tickers depending on market conditions.
Step 2: Filter for daily options volume above 10,000. This eliminates illiquid names immediately. You're probably down to 30-50 tickers now.
Step 3: Check bid-ask spreads on your target strikes. Open the options chain for each remaining ticker. Look at the 25-35 delta puts (for CSPs) or 20-30 delta calls (for covered calls). If the spread is wider than 5% of the mid-price, remove it. Down to maybe 15-25 tickers.
Step 4: Check the earnings calendar. Remove any stock reporting earnings in the next 14 days (unless you specifically want an earnings play). This usually cuts another 3-5 names.
Step 5: Check fundamentals and news. Quick scan for anything alarming — pending lawsuits, CEO resignation, product recall, FDA decision. Google "[ticker] news" and spend 30 seconds per stock. Remove anything sketchy.
Step 6: Rank by premium yield. For your remaining 10-15 candidates, calculate the annualized premium yield. OptionsPilot's calculators do this automatically — enter the stock, your target strike, and expiration, and it shows annualized return, breakeven, and probability analysis.
Step 7: Pick your trades. Select 3-5 positions maximum. Diversify across sectors. Enter at a limit price at or slightly above the mid-point — never hit the bid on a short option.
Stocks to Avoid When Selling Options
Some categories of stocks are consistently bad for premium sellers, no matter how juicy the premiums look:
Pre-FDA Biotech
That 95% IV on a small-cap biotech isn't free money — it's reflecting a real probability that the stock moves 50%+ on a binary event. A failed trial can send a $40 stock to $8. Your $2.00 put premium is meaningless against that kind of move.
Meme Stocks and Low Float Names
GME, AMC, and their ilk can gap 30% on a Reddit post. These stocks don't follow normal probability distributions. The fat premiums reflect fat tail risk, and occasionally those tails hit. Professional market makers price these options — you're not getting an edge over them.
Pre-Earnings Stocks (Unless Intentional)
Selling options 2-3 days before earnings is tempting because IV is at its peak. But you're eating the full event risk for a few days of theta. If you want to play earnings, sell strangles or iron condors as a deliberate strategy — don't stumble into it because the premium looked good.
Stocks in Freefall
A stock that's down 40% in a month has high IV for a reason. "Selling puts at support" on a falling knife is how traders blow up accounts. Wait for the stock to base — two to three weeks of sideways price action — before selling premium.
Low-Price Stocks (Under $10)
Options on $5 stocks have tiny premiums in absolute terms. Commissions and assignment fees eat into returns disproportionately. A $0.15 premium on a $5 stock sounds like 3% monthly return, but after commissions and the wide bid-ask spread, you might net 1% or less.
How to Use OptionsPilot to Streamline This Process
OptionsPilot's options screener and calculators handle most of this workflow automatically. The screener surfaces stocks with elevated premiums and good liquidity, the covered call calculator and cash-secured put calculator show you exact returns at different strikes, and the AI strike finder recommends specific strikes based on your risk tolerance and income goals.
You can also use the trading journal to track which setups work best for you over time. After 50+ trades, you'll have hard data on which IV Rank ranges and sectors produce your best results.
FAQ
What IV Rank is good for selling options?
An IV Rank above 30 is the minimum threshold for selling options. The ideal range is 40-70 — elevated enough to provide premium edge but not so extreme that it signals dangerous binary risk. Above 80, investigate why IV is so high before trading.
How do I find stocks with high premiums?
Use a screener that sorts by IV Rank or IV Percentile, then filter for daily options volume above 10,000 and bid-ask spreads under 5% of the mid-price. OptionsPilot's screener does this automatically for covered calls and cash-secured puts. Alternatively, Barchart's free options screener lets you sort by IV Percentile.
What are the best stocks to sell covered calls on?
The best covered call stocks combine elevated IV Rank (above 30), high options liquidity, tight bid-ask spreads, and fundamentals you're comfortable owning long-term. Common examples include large-cap tech (AAPL, MSFT, AMD), mega-cap ETFs (QQQ, SPY), and blue-chip dividend payers. Avoid selling covered calls on stocks you expect to drop significantly — the premium won't compensate for a major decline.