IV crush
The drop in implied volatility after an event such as an earnings release. It hits the premiums of options bought before it, once uncertainty is gone.
Definition
Before a major event (an earnings report, a central bank decision, macro data) implied volatility rises — the market is pricing uncertainty. Once the news is out, that uncertainty disappears, IV falls, and option premiums “release”. IV crush is that decline: it can wipe out the profit on options bought before the event even when the direction was right, because the drop in vega outweighs the move in delta.
Example
You buy a call before earnings for 5 PLN (3 PLN of which is the “IV premium”). The report is good and the price rises, so delta adds +1 PLN, but vega takes away 3 PLN — the premium falls despite the correct direction. That is the structure of option pricing, not bad luck.
Anti-example / common mistake
Buying options before earnings “because the report will be good” with no plan for the crush. Also note the role of theta — time and volatility work together.