Comprehensive Institutional Breakdown
When major events (e.g. corporate earnings) approach, IV expands, inflating options premiums. Once the event passes, IV collapses instantly ('IV Crush'), causing options buyers to lose capital even if they guessed the direction correctly.
Carl Brent Anthony Institutional Rule
Avoid buying unhedged options when IV Rank is above the 75th percentile to protect from catastrophic IV crush.
Cross-Market & Execution Note
Distinct to options contracts; spot equity shares do not experience pricing decay from volatility crush.