IV Crush: Why Being Right on Direction Still Loses, and Why Selling It Is Not Free
IV crush is one of the most reliable phenomena in options: implied volatility inflates before an earnings report and collapses the instant it passes. It punishes buyers who are right on direction but wrong on volatility, and it tempts sellers with what looks like a free harvest. Both halves matter. This explains the mechanism honestly, including why selling the crush is a short-gamma trap that most explanations gloss over.