Trading Index Options During Earnings Season: Volatility Crush Strategies
Praveen Dubey (SEBI Registered RA)
SP RESEARCHVIA PVT. LTD. (INH000015808)
Capitalizing on Implied Volatility Collapse
Ahead of major corporate earnings announcements, implied volatility (IV) of options tends to skyrocket, inflating option premiums. Once the numbers are announced, the uncertainty vanishes, causing IV to plummet. The options desk at SP RESEARCHVIA PVT. LTD. explains how to trade this phenomenon.
How do you profit from implied volatility crush during earnings?
Enter Short Iron Condors or Short Straddles right before the earnings announcement to capture the rapid collapse in implied volatility (IV crush) that occurs immediately after the news is released.
Managing Risks in IV Expansion
Selling options before earnings carries unlimited risk if the stock makes an outsized move beyond the market's expected range. Always define your risk by using defined spreads like Iron Condors or Iron Butterflies.
Written by Praveen Dubey
Chief Research Analyst | SEBI Reg: INH000015808
Statutory Warning & Risk Disclaimer: Investment in securities market is subject to market risks. Read all related documents carefully before investing. Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Content provided on this blog is for informational and educational purposes only.