IV Crush
IV Crush is the sharp drop in implied volatility right after a known event resolves, deflating option premiums regardless of direction.
What IV Crush Means
IV Crush is the rapid collapse in implied volatility that happens once a scheduled, uncertain event is over. Before the event, traders bid options up to hedge the unknown, inflating IV and premiums. The moment the result is known, uncertainty vanishes and IV deflates within minutes — pulling option prices down with it.
Because Vega is positive for buyers, this collapse hits long-option positions hard. A trader can be right on direction and still lose money if the IV crush outweighs the favourable move in the underlying.
How to Trade Around IV Crush
Buyers must clear two hurdles after an event: the underlying has to move far enough to overcome both Theta and the IV drop. This is why naive event-day call buying so often fails. Sellers, by contrast, structure short premium trades into the IV spike and let the crush work for them — though they take on the risk of a large directional move.
IV Crush in the Indian Market
The most reliable IV crushes in India come after the Union Budget, RBI policy decisions, and election outcomes, when India VIX can drop several points in a single session. Many traders sell straddles or jade lizards into the pre-event VIX spike to harvest the crush. Quintal Mind tracks live India VIX and per-strike IV so you can see the inflation building and the crush unfolding.
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