Why Does IV Often Decrease Immediately after an Earnings Report? ⎊ Path

Why Does IV Often Decrease Immediately after an Earnings Report?

IV decreases after an earnings report because the major uncertainty regarding the company's future performance has been resolved. The market has less to speculate on, leading to a reduction in the expected future price fluctuation.

This is a common example of volatility crush.

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Glossar

IV Decrease

Volatility ⎊ IV decrease, or a reduction in implied volatility, signifies a decline in market expectations for future price fluctuations of the underlying asset.

Earnings Report

Disclosure ⎊ Earnings reports within cryptocurrency, options trading, and financial derivatives represent periodic public releases of financial performance data by entities operating within these markets, often encompassing exchanges, protocol developers, or investment funds.