Learn › Volatility & the Greeks · Jun 2026 · 2 min read
What Is IV Crush?
You bought a call, the stock rose after earnings… and you still lost money. That's IV crush — the most common way new options traders get burned.
What happens
In the days before earnings, uncertainty is high, so implied volatility climbs and option premiums swell. The moment the report drops, the uncertainty is resolved — the market knows the numbers — and IV collapses almost instantly. That collapse is IV crush, and it deflates option prices across the board.
Why it burns option buyers
Say a stock is $100 and you buy a $105 call for $4 the day before earnings, with IV at 80%. Earnings come out, the stock jumps to $107 — you were right! But IV crashes from 80% to 35%, and your call is now worth $3.20. The stock moved your way and you still lost 20%, because the volatility you paid for evaporated. To profit as a buyer through earnings, the move has to be big enough to overcome the crush — a high bar.
The flip side: sellers love it
If buyers get crushed, sellers get paid. Selling premium before earnings means you pocket the inflated IV and then watch the option deflate as IV collapses — IV crush works in your favour. This is why some traders deliberately sell cash-secured puts or credit spreads into earnings.
But it's not free money
The same earnings report that crushes IV can gap the stock 10–20% overnight. Sell a put into earnings and a bad print can blow straight through your strike before you can react. The rich premium is the market paying you to take that gap risk — sometimes it's worth it, often it isn't. The honest rule: a fat premium the week of earnings is a warning label, not a gift.
How to avoid getting caught
The fix is simple: know the earnings date before you trade. A premium that looks too good is often just an earnings report you didn't check for. We wrote a whole guide on checking earnings risk before selling options.
How TickerRisk helps
This is exactly what TickerRisk was built for. Our Risk Score automatically flags when earnings (or other catalysts) fall inside your option's window, so a juicy-looking premium can't ambush you. The strategy scanners like the wheel even gate candidates by that risk, so earnings traps are filtered out by default. See the earnings calendar or scan any ticker free.
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