IV Crush Play

Yes. If the stock moves MORE than the implied move, the movement loss can exceed the IV crush benefit. For example, if options imply a 4% move but the stock moves 8%, you'll likely lose despite the crush. This is the main risk of IV crush plays.

For major ASX stocks like BHP, CBA, and CSL, IV typically crushes 30-50% post-earnings. A stock with 40% pre-earnings IV might drop to 22-28% post-earnings. This varies by stock - some crush more consistently than others.

Iron condors or credit spreads are best for beginners because they have defined (limited) risk. You know your maximum loss before entering. Avoid naked straddles/strangles until you have experience managing unlimited risk positions.

No - exit shortly after the event (typically the morning after). Once IV crushes, your edge from the event is gone. Holding longer exposes you to regular theta/gamma dynamics without the IV crush benefit. Take profits and move to the next opportunity.

Look for: High IV Rank (>70%) pre-earnings, consistent historical crush (30%+ every quarter), implied move ≥ historical average move, and liquid options with tight spreads. Track your own data over time to identify the best candidates.

Puts typically have higher IV than calls (skew). You can exploit this by selling more puts or using structures like Jade Lizard that capture the rich put premium. Post-earnings, skew often compresses, adding to your profit if you've sold the expensive side.

No - be selective. Only trade when: IV Rank is high (>70%), implied move ≥ historical average, the stock has consistent crush history, and liquidity is adequate. Forcing trades on mediocre setups reduces your edge and increases risk.

After-close earnings mean the stock reacts in the next day's pre-market. Your exit would be the morning after the announcement - same principle, just different timing. Be aware of overnight gap risk and ensure your structure can handle the next day's opening print.

Limit to 4-6 concurrent positions with total risk < 20% of account. Diversify across sectors to avoid correlation - don't have 4 bank earnings trades simultaneously. Peak earnings season (Feb/Aug in Australia) requires discipline about concentration.

Yes, around RBA decisions and other macro events. XJO options see elevated IV before RBA announcements, and IV typically crushes post-decision. Same principles apply: sell when IV is elevated, exit after the event.

Collect historical data: pre-event IV, post-event IV, stock price moves for each earnings event. Simulate your strategy (entry rules, structure, exit rules) on this data. Calculate win rate, average P&L, profit factor, and max drawdown. Validate on out-of-sample data.

Balance vega exposure (crush capture) against movement cushion. ATM has highest vega but tightest profit zone. 16-delta strikes balance both. Using breakevens at 1.0-1.2× implied move provides cushion while maintaining meaningful vega exposure.

Sell the front-month options (high IV, contains event) and buy back-month options (lower IV). Post-event, front-month IV crushes while back-month holds relatively better. You profit from the term structure normalization. Risk: front-month must crush more than back-month.

Only if you have genuine conviction and can accept being wrong. Directional bias adds profit if correct but removes the 'neutral' safety. Most practitioners find neutral IV crush plays more consistent - let the vol edge work without directional risk.

First reporters resolve sector-level uncertainty. If ANZ beats, bank sector sentiment improves, affecting NAB/WBC/CBA IV and outcomes. Later reporters face primarily stock-specific risk (less sector tail risk). This can make later reporters more predictable for IV crush plays.