IV Rush Before Earnings

Why implied volatility rises before earnings, how that affects option prices, and how traders structure pre-earnings IV plays.

What is IV rush?

IV rush is the rise in implied volatility in the days and hours before an earnings release. As traders hedge and speculate, demand for options increases, lifting IV and option premiums.

• Happens into the event, not after it.
• Typically strongest in the nearest expiration that contains the earnings move.
• Inflates the implied move quoted by the options market.

IV rush vs IV crush

IV rush is attractive because you can often build non-directional positions, then exit before the announcement and sidestep most of the crush.

How pre-earnings IV affects option prices

• As IV rises, option premiums increase across calls and puts.
• The at-the-money straddle (call + put) becomes more expensive, so the implied move widens.
• If the stock drifts favorably while you’re long premium, that can amplify returns.

Typical IV rush trade idea

The basic idea: buy volatility early enough that IV has room to rise, but not so early that theta decay kills you.

Common approaches

• Short-dated straddles or strangles entered before IV accelerates.
• Intraday IV rush plays on names where IV tends to spike in the final hours before the print.
• Exiting before the close on earnings day to avoid the crush.

How EarningsWatcher models IV rush

1. IV Rush Radar

IV Rush Radar looks at the historical behavior of IV into earnings:

• How much IV typically rises into the event.
• How fast the rise tends to happen (days vs. hours).
• Whether IV expansion historically exceeded theta decay for simple structures.

2. Simulator for pre-earnings exits

With the Simulator you can:

• Model a structure (e.g. ATM straddle) and tell it you plan to exit before the event.
• See how P/L looked historically for that timing choice.
• Understand realistic win/loss distributions for pre-earnings exits instead of guessing.

When IV rush trades make more sense

• You want to avoid overnight event risk but still trade earnings build-up.
• The stock has a clear pattern of pre-earnings IV expansion that beat theta historically.
• You’re okay with more modest target returns (often +5–10%) in exchange for lower tail risk.

Common mistakes with IV rush

• Entering too early and getting bled by theta while IV is still flat.
• Not checking whether IV actually rises for that ticker or is already elevated.
• Holding through the print out of greed and turning an IV rush trade into a crush victim.