Talk about IV value, the underlying stock rises but the option doesn't rise and instead falls—20251021

Why was there almost a floating loss when I checked the account this morning? The market was so good last night, but the options didn't follow the rise of the underlying stock? Suddenly interested, I flipped through books, checked materials, and even used DeepSeek and Gemini. For now, I attribute the main reason to the fluctuation of IV value and made a record.

1. The impact of IV value during earnings season fluctuates greatly (the peak occurs within 3 days before the earnings report). The 260618 call has multiple earnings seasons, relatively mild, while the 260116 call is only relevant for this earnings report. It's crucial to sell during the earnings season peak if you want to capitalize on it. Those who remain bullish post-earnings can ignore this.

2. Posted a few positions. Subjectively, the underlying stock rose, but the options didn't rise or didn't rise according to the previous volatility (compared to the close on 10.17). For example: Meta underlying +$15, option +1 / Google underlying +$3, option +0.6 (the underlying hit a new high, but the option was far behind). Like brk.b, the underlying rose, but the option was still at a position corresponding to a $2-3 drop.

3. Here’s a simple summary of the reasons for IV value fluctuations in options: sudden uncertainty in events (e.g., earnings reports, major information disclosures) / supply-demand imbalance (reduced trading) / volatility smile skew (fear of a drop during earnings season outweighing the rise).

4. The reasonable range for IV value varies. For example, brk.b:

· IV range: Usually 14% - 20%

· IV peak range (around earnings release): 1-2 days before earnings, IV climbs to a peak, usually between 22% - 30%. Compared to normal times, IV rises by about 50% on average before earnings (if you remain bullish or there are multiple earnings seasons, it’s much smoother).

Last night was a pitiful lower bound of 15.5%, quite a floating loss 😂

5. The relationship between time decay and IV value: They jointly affect option value, but for long calls, time decay is steady, while IV value fluctuates greatly. This is why, at the same underlying stock price, options a week apart can differ by nearly 10%. Therefore, the best time to sell options successfully is finding the optimal balance between high IV (Vega) and time decay (Theta)—usually before major events (unless you’re long-term bullish).

6. Next, observing other targets (apple/avgo/nvda/orcl/mstr/bmnr, etc.), it’s the same, especially mstr, which crashed.

Finally, I hope everyone finds value and rides the wave of success!