Implied volatility (IV)
The market's priced-in expectation of how much a stock will move — and therefore what you PAY when you buy an option. High IV is not a forecast that you will win; it is a high price of admission.
The decisive dynamic around catalysts: option prices carry an event premium INTO the event, and that premium deflates the moment the event has printed — often fast enough to halve a call's value while the stock itself drifts higher. Buying calls the morning after a public catalyst means paying the most expensive volatility of the whole cycle right as the reason for it expires. You can be right on direction and still lose on the vol. Always translate IV into the daily move it implies and into the Breakeven (options) before paying it; the shorter the expiry (the extreme case is 0DTE (zero days to expiry)), the more brutal the arithmetic.
Used in
- Doximity Doubles Overnight: Squeeze or Re-Rating? Why the Difference Decides Everything — The squeeze-vs-re-rating test, and why chasing either with weeklies fails
- The Hertz 'Squeeze' That Wasn't: Reading Positioning Before You Pay for It — Why the calls were priced to lose
- Short-Squeeze Forensics: The Method — What the options market already charged