Stock Market Glossary

IV Crush

Sharp decline in implied volatility following an expected event.

In brief: Sharp decline in implied volatility following an expected event.

Meaning in practice

An IV crush often occurs after quarterly figures, FDA decisions or central bank appointments. Before the event, option premiums are expensive, after which the expected uncertainty drops suddenly. Option buyers can lose despite correct price direction if the drop in volatility overcompensates the move.

Context for investors and traders

For traders, this term is most useful when preparing and executing an order. Its meaning depends on the venue, liquidity, time frame and order type. A single reading is not a reliable buy or sell decision.

How to use this in practice

Use the term first to describe the situation and add verifiable data: time frame, benchmark, costs and liquidity. Only then does it become an assessment that can be connected to an investment objective and risk budget.

What to keep in mind

Avoid false precision. Many market terms describe probabilities or historical patterns; they neither guarantee a return nor replace the review of a specific security.

What does IV Crush mean in simple terms?

Sharp decline in implied volatility following an expected event.

When is this term relevant to investors?

Assess the term together with price, costs, position size and a predefined loss limit. That turns a market observation into a traceable framework rather than an automatic trading rule.

What should I check before acting on IV Crush?

Avoid false precision. Many market terms describe probabilities or historical patterns; they neither guarantee a return nor replace the review of a specific security.

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