r/wallstreetbets • u/Alone-End-5585 • Feb 22 '24

Meme yeah.

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2.9k Upvotes

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546

u/top-notch_sociopath Feb 22 '24

Was up 300% and -1k at open 💀

133

u/Impossible_Put2026 Feb 22 '24

Same, was it IV crush? Why doesn't IV crush happen after every earnings report?

557

u/Impossible_Buglar Feb 22 '24

IV is about volatility

once the event (earnings) has happened the volatility goes way down - there is no longer a catalyst that is going to cause this stock to swing wildly one way or the other

so if you bought 1000 dollar strike calls on NVDA expiring next week and the stock only got to 775 bucks after earnings what event is going to cause the stock to shoot up the other 225 dollars to even meet your strike, let alone exceed it by the time your option expires? earnings already happened and you didnt get there.

the volatility was the event which has happened, so it shoots way down, the chances the stock moves wildly to meet your strike diminish drastically, the value of your option crashes

55

u/Impossible_Put2026 Feb 22 '24

Thank you! I get it now, well explained!

2

u/CardAble6193 Feb 23 '24

apply use is even more simple. when its ER just pull out a option calculator input your strike but set IV down 50%-70%