What is IV crush?

Short answer

IV crush is the fast drop in implied volatility right after a known event such as earnings. Before the event, options are priced for a big move; once the news is out, that uncertainty premium disappears and option prices fall — sometimes even if the stock moved in your direction.

NVDA volatility skew, live

As of Oct 16, 7:49 PM ET

25-delta call IV minus 25-delta put IV, in volatility points. Source · Rebel Intelligence.

Why it happens

Implied volatility rises into earnings because nobody knows the result. After the report, the unknown is gone, IV resets lower and vega losses hit every option on the stock.

Ways traders plan for it (examples, not advice)

Compare the expected move to your target; if the stock must beat it, buying options is a hard trade.
Spreads reduce vega exposure because you own and sell volatility at once.
Some traders sell premium into earnings with defined risk to benefit from the crush.

Common questions

How much does IV usually drop after earnings?

It varies widely by stock and quarter; front-month IV commonly falls back toward its normal level within a session.

Can I avoid IV crush?

You can reduce it with spreads or by trading longer-dated options, which lose less vega from one event.

Does IV crush affect stocks?

No, only options prices. The share price itself is not affected by implied volatility.

Go deeper with Rebel Intel

What is the expected move for NVDA earnings?Show me the volatility skew for NVDA Build a defined-risk earnings trade example

Educational only, not investment advice. Options involve risk and are not suitable for all investors. See how Intel is reviewed.