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REDDIT

IV collapse with visualizer

A
Feb 13, 2025 · 01:48

In the first picture it seems like I have a trade where I can’t possibly lose, which is pretty sus. I’ve heard of these types of setups where the IV collapses and you end up with a pit of despair in the center (see second photo). But isn’t this visualizer just calculating it at the point of sale? If the IV collapsed to the 60 level shown in the second photo wouldn’t it just make all of my short positions more valuable (because I could sell them at a lower premium) and my long less valuable which would essentially even out the position? Or is IV crush a real danger in positions like these?