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What Is a “Volatility Crush”?

A sharp and sudden drop in an option's Implied Volatility, causing a rapid decrease in the option's premium.
Greeks.Live22.11.25

What Is a “Volatility Crush”?

A volatility crush occurs when the implied volatility (IV) of an option drops sharply, usually following a major market event like an earnings report or a major news announcement. Since IV is a key component of the option's premium (time value), a crush causes the option price to drop significantly, which is detrimental to option buyers and beneficial to option sellers.

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How Does a “Volatility Crush” Affect an Option’s Time Value?

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