I’ve been trying to understand this better with short premium strategies.
Suppose I sell an iron condor or short put spread because IV is elevated and I expect the underlying to stay mostly range-bound. I understand the expiration payoff profile, but I’m less clear on what happens before expiration if implied volatility spikes further while the stock barely moves.
I was looking at this volatility shock analyzer from ICFDT ([https://icfdt.com/options-volatility-shock-analyzer](https://icfdt.com/options-volatility-shock-analyzer)), which shows that a position can take a pretty meaningful mark-to-market hit from an IV shock even when price movement is small:
Is the right way to think about this that the expiration payoff chart is almost the “best case path” if nothing major happens before expiry, but the actual trade can become temporarily ugly because vega overwhelms theta?
For people who trade short premium regularly: how do you size or manage trades where the thesis is directionally right, but volatility expansion still hurts the position before expiration?
