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Earnings IV crush, explained

Uncertainty resolves

Before an earnings announcement, options can include a premium for a discrete event. Once the report is public, some of that uncertainty disappears. The resulting decline in implied volatility is often called IV crush. Its size varies across events and expirations; a drop is not guaranteed.

A correct direction can still lose money

A long option's value depends on the stock price, remaining time, and implied volatility. A favorable stock move may be offset by a drop in volatility or time value. Conversely, a short option may lose because the stock move overwhelms the benefit of lower volatility. Earnings gaps can exceed the move embedded in prices.

Separate pre-event and event exposure

A position closed before the report studies pre-earnings repricing. A position held through the report carries the announcement gap. Those are different experiments and must use explicit entry and exit timestamps. Expirations that straddle the report can react differently from later expirations.

Use evidence rather than a slogan

Compare implied and realized moves, inspect term structure, and read the position's exact legs. An iron condor limits its modeled expiration loss with protective wings, but assignment and execution still require attention.

Options Whale retains rejected candidates and missing evidence. Open earnings research to inspect those limitations alongside the feature values.

Source: OCC's Options Industry Council: implied volatility movement.