Iodine, which has the form `I_2` , is soluble in ethanol. It doesn't dissolve as well in water because iodine is non-polar and water is very polar. Ethanol is polar, but less so than water.
Polar substances dissolve in other polar substances and non-polar substances dissolve in other non-polar substances. In order for a solute to dissolve in a solvent they must have similar intermolecular attractions. If the solvent-solvent attractions or solute-solute attractions are stronger than the solvent-solute attractions the solute won't dissolve well.
The solubility of iodine in alcohol is increased by adding some NaI. This facilitates the ionization of some of the `I_2` as `I_2` and `I-` form `I_3^-` . This solution, called Tincture of Iodine, is used as a disinfectant.