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Rule of 16 calculator

Convert implied volatility to an expected daily move — and back — with the rule of 16.

Runs 100% in your browser
÷ 16 ⇅ × 16

Exact divisor used: √252 ≈ 15.87.

How to use the rule of 16

  1. Enter IV or daily move. Type an annual implied volatility, or an expected one-day move.
  2. Read the other side. The complementary value updates instantly (÷16 or ×16).
  3. Sanity-check a trade. Compare the implied daily move to the move you expect.

Why the rule of 16 works

Volatility doesn't scale linearly with time — it scales with its square root. A year has ~252 trading days and √252 ≈ 15.87 ≈ 16, so dividing annual IV by 16 gives a quick daily figure. It's the same maths as the expected-move calculator, reduced to mental arithmetic. Pair it with the implied-volatility calculator to read IV off a live option.

Educational tool only — not financial advice. An approximation, not a precise forecast. Options trading carries a high level of risk.

Frequently asked questions

What is the rule of 16?
The rule of 16 is a trader’s shortcut: divide an option’s annual implied volatility by 16 to get the stock’s expected one-day move in percent. So 32% IV implies roughly a 2% daily move. It works because there are about 252 trading days in a year and √252 ≈ 16.
Why 16 and not some other number?
Volatility scales with the square root of time. To convert an annual figure to a daily one you divide by √(trading days) = √252 ≈ 15.87, which rounds to 16 for quick mental math. This tool uses the exact √252.
Can I go the other way?
Yes — multiply a daily move by 16 to get the implied annual volatility. Enter either side below and the other updates.
How accurate is it?
It is a fast approximation that assumes a constant, normally-distributed volatility. It is great for sanity checks, not for precise pricing — use the Black-Scholes and expected-move calculators for that.
Is anything uploaded?
No — it computes in your browser.

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