I tracked IV rank mean reversion signals against actual short premium returns for 6 months

[+5] u/iron_condor34: People see vol is mean reverting and don't go further than that. Everyone knows its mean reverting. Hence, why vol term structures are usually in contango. Also, vol tends to cluster. Low vol periods follow low vol periods, etc. Some of the best times to buy vol is when its starting to spike not necessarily when vol is "low". I've had my comments down voted saying that before. Bout time someone else said it. Lol [+5] u/mjrice: Thanks for sharing. To rephrase and add something to think about; IV rank measures volatility relative to its own history, but says nothing about whether that IV actually compensates for what the stock is realistically going to do. That's why I use the IV/HV ratio instead, specifically normalized IV divided by HV30, where IV is adjusted from its 365-day basis to match HV's 252 trading day basis before comparing them. The ratio asks a different question than rank. Not 'is IV high relative to itself' but 'is IV high relative to what this stock is actually moving.' A stock can have IV rank of 80 and still have a ratio below 1.0 if realized vol has been running hot enough to keep pace. That's your catalyst scenario, and the ratio catches it where rank misses it I think. Your observation about the mean itself shifting is also something I see by looking at HV slope. When HV15, HV30, and HV60 are all accelerating together, the baseline is moving and whatever edge exists at entry is likely compressing toward expiration, not expanding. These two combined (IV/HV edge and HV slope) I find useful, especially when combined with bollinger band positioning, which speaks to the whole mean reversion signaling.