Earnings IV Crush Explained
Earnings IV crush explained. Learn why implied volatility drops after earnings, how it impacts option prices, and how traders plan around it.
Frequently asked questions
Does IV always crush after earnings?
Not always. Most symbols see a volatility reset, but the size varies based on the surprise, guidance, and overall market conditions.
Is it better to sell options before earnings?
Some traders sell premium to take advantage of elevated IV, but it carries gap risk. Use defined-risk structures and position sizing if you choose to sell into earnings.
How do I estimate the market's expected move?
Check the at-the-money straddle price for the earnings expiration. It provides a rough expected move, which you can compare to your trade thesis.