The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question – “What is an IV crush?” An IV crush or an implied volatility crush happens when the market goes from a period or an event of unknown information to a period or an event of known information. Now, the best example of this is likely an earnings event that a company might go through on the corporate level. Before earnings are announced for a company, the market has a lot of uncertainty. “Where is the company going to announce earnings? Did they make a profit? Are they growing revenues at the appropriate rate? Is there something that they haven’t told us that they might tell us during this earnings event?” And so, as a result, we start to see implied volatility or expectation of a big move start to rise heading into that earnings event. Now, once the company actually announces earnings and all of the information is now known in public, even if the information is bad or even if the