What Is IV Crush (and Why Earnings Creates It)

Options price uncertainty. Ahead of an earnings report, that uncertainty spikes — traders bid up implied volatility because nobody knows the print. The moment the numbers hit the wire, a huge chunk of that uncertainty vanishes. Premium that was expensive minutes earlier collapses. That collapse is IV crush.

The rental, not the purchase

Buying a straddle into earnings is renting a weekend of drama. If the stock moves less than the options market priced in, both the call and the put lose value even when the direction was "right" — because the IV component of the price evaporates.

Sellers are on the other side: they collect that rented premium, hoping the realized move undershoots the expected move. When it does, the crush is their edge.

What the scanner watches

IVCRUSH flags names where:

1. IV rank is elevated relative to the past year
2. Historical crush % after prior prints is large
3. Expected move (ATM straddle) looks rich vs. realized history
4. Countdown to the report is short enough to matter

Hazardous and toxic tags are not trade signals — they are research markers that premium looks stretched ahead of a known catalyst.

Practice before you sell gamma

Short-premium earnings trades can blow up when the move is bigger than priced. Rehearse sizing, strikes, and exits on Stock Picks before using real buying power.