IV Crush: What It Is, and How to Trade It

The Automated Trading Podcast by Advanced AutoTrades

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This episode explains "IV Crush" in options trading, a phenomenon where the implied volatility (IV) of an option sharply declines after a significant event, like an earnings announcement or Federal Reserve meeting. The hosts clarify that IV is the market's expectation of future price movement, and it inflates option prices before such events. However, once the event passes, uncertainty vanishes, leading to a rapid drop in IV and, consequently, option values, often to the detriment of option buyers. The hosts, seasoned traders, then propose a strategy to profit from IV Crush by selling options using methods like Iron Condors, rather than buying them, as this strategy benefits from the subsequent decrease in volatility. Read the whole blog article at https://advancedautotrades.com/iv-crash/

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