Everyone loves a bargain. You see something marked down 20%, 30%, even 50%, and it grabs your attention.

Here’s the thing: in the options market, most traders don’t actually know when they’re getting a bargain. They think they do. They look at a $2.25 trade next to a $4.00 trade and assume the cheaper price tag means the better deal. It doesn’t work that way — and confusing the two can cost you.

My software just flagged three names sitting on what I call the market’s clearance rack, and the reasoning behind each one is more interesting than the price tag alone.

But first, let’s talk about what cheap really means.

The Biggest Mistake Traders Make When Pricing Options

Most traders know there are two basic types of options. Calls give the buyer the right to buy, and puts give the buyer the right to sell. That’s Options 101.

But ask the average trader whether a specific option is cheap or expensive, and that’s where things get more complicated.

A lot of people simply look at the dollar price. If one option costs $2.25 and another costs $4, the $2.25 option must be cheaper. But that’s like saying a $20 steak is automatically a better deal than a $30 steak without knowing what either steak normally costs. What if the $20 steak usually sells for $10, while the $30 steak normally sells for $60? Now which one is really on sale?

That’s why I don’t judge an option by its price tag alone. I look at implied volatility (IV).

Every Stock Has Its Own “Fear and Greed” Gauge

Most traders eventually run across the VIX — the market’s “fear gauge.” When the VIX spikes, fear is high and S&P 500 options tend to get more expensive. When the VIX falls, those options tend to get cheaper.

That’s useful information, but there’s a problem: the VIX measures expectations for the broader market. It doesn’t tell you whether the options on an individual stock are cheap or expensive.

Every optionable stock has its own built-in fear and greed chart, and that’s exactly what I track. Typically, I’ll look back over the past year and compare where near-the-money options are trading today with where their implied volatility has been historically.

If implied volatility is near the top of its range, those options may be relatively expensive. If it’s near the bottom, that’s where I start looking for bargains. Think of it as the difference between looking at the sticker price and checking the price history before you buy.

Right now, three names stand out.

“Clearance” Trade No. 1: USA Rare Earth

The first name on my list is USA Rare Earth (NASDAQ:USAR).

Based on the IV data I’m looking at, USAR’s options have fallen toward the cheapest levels we’ve seen over the available lookback period, and that gets my attention.

The stock and its IV have generally moved together. As USAR climbed, volatility climbed with it. As it pulled back, volatility came down too. But now, IV has dropped toward the low end of its range. In other words, the price of uncertainty has gotten cheaper — exactly the kind of setup an options buyer wants on their radar.

I’m not saying a low implied-volatility reading guarantees the stock is about to make a big move. It doesn’t. What it does tell you is that, relative to its own history, you may not be paying a premium price for the opportunity. And all else being equal, I’d rather shop when something is on sale than after everyone else has rushed through the door.

“Clearance” Trade No. 2: GameStop

Next up is a name everyone knows: GameStop Corp. (NYSE:GME).

GME has seen its share of volatility — that’s no secret. But recently, the stock has been trading in the low-$20 range while its IV has fallen sharply.

Based on the past year of data I’m tracking, both calls and puts have become extremely cheap relative to where GME options have traded historically. That doesn’t mean you should blindly buy them. Cheap can always get cheaper.

But when a stock with a history of explosive moves sees the price of its options crater, that’s something you want on your screen. Because if volatility returns, today’s clearance prices may not stick around.

“Clearance” Trade No. 3: Centrus Energy

Rounding out the list is Centrus Energy Corp. (NYSE:LEU).

We don’t have the same full year of comparable options data here, but within the available life cycle I’m tracking, IV has fallen significantly from its highs. In fact, LEU’s options are trading at roughly a 35% discount to the higher volatility levels we’ve previously seen.

I’m not talking about the stock itself being 35% off. I’m talking about the relative pricing environment for the options — an important distinction, because when I’m buying options, I don’t just care where I think the stock could go. I care what I’m paying for the trade.

Right now, LEU is another name where that price has gotten a lot more interesting.

Cheap Options Aren’t Enough

One last thing, and here’s where traders can really get themselves into trouble.

Finding cheap options is not the same thing as finding a complete trade. It’s one part of the process. Personally, I like to use a simple four-step approach:

1. Spot the opportunity.
2. Plan the trade.
3. Execute and manage it.
4. Rinse and repeat.

The implied-volatility scan helps with step one. It tells me where options may be historically cheap and where the market may be offering a better price than usual.

From there, I still need a reason to trade. I still need direction, timing, and a plan for managing risk. That’s the difference between finding something on sale and buying something just because it has a red sticker on it.