Been trading options for a while now and keep hearing about iv crush. Had it happen twice last month where my calls were right about direction but still lost money.
Wondering if this always means big losses or if there are ways to work around it. How do other traders handle this situation?
Big losses hit when earnings or major announcements are held through. Day-to-day trading keeps the IV crush damage smaller.
Switch to shorter expiries and bail fast when trades go in your favor. Always check IV percentile before jumping in.
Spreads can cushion the blow since you’re buying and selling premium at the same time.
Not always a killer, but it’ll hurt if you’re caught off guard. The trick is checking IV before you buy - don’t grab expensive premium right before earnings or big announcements.
I buy options when IV’s low and sell before events that spike volatility. If I have to hold through events, I’ll use spreads instead of straight calls since they don’t get hammered as hard by IV changes.
This video shows exactly how to avoid getting crushed:
Being right on direction isn’t enough - timing your entry and exit around IV cycles matters just as much as nailing the price move.
IV crush won’t always wreck you - depends on how much time’s left and what you paid for premium. Buy when IV’s low, sell when it’s high. Skip earnings plays unless you’re the one selling premium.
Last year I got burned three times straight on earnings plays. Called the direction right every time, but IV crush killed me after each announcement.
Now I sell half before earnings to lock in gains. Hold the other half through the event.
Still stings when it happens, but losses are way smaller.
Time your exit before major events. I learned this the hard way after losing 60% twice.