IV Change Scenarios — Vega P&L Flows
How IV expansion and crush affect long/short vega positions — animated in real time
Scenario 1 · IV Expansion + Long Vega — Profit
IV rises → long vega positions gain value proportional to vega exposure
📈 IV expansion profits long vega — buy vol before spike
Scenario 2 · IV Crush + Short Vega — Profit
IV falls post-event → short vega positions profit as option premium collapses
📉 IV crush profits short vega — sell vol after event
Scenario 3 · IV Expansion + Short Vega — Loss
Unexpected IV spike devastates short vega — gamma squeeze compounds losses
💥 IV spike into short vega = max pain scenario
Scenario 4 · IV Crush + Long Vega — Loss
IV crush erodes long vega premium — theta decay accelerates losses
🧊 IV crush into long vega = premium bleeds away
IV level
Profit
Loss