Vega

Long options have positive vega (they gain value as IV rises) and short options have negative vega (they gain as IV falls). This is the mechanism behind the classic "IV crush" — a long straddle bought ahead of an event can lose money even on a correctly-timed move, because IV collapses the moment the uncertainty resolves, faster than the underlying's move can add value back.

Example: an ATM straddle priced with IV around 14% might cost ₹330 combined. If IV jumps to 18% ahead of a policy announcement, with spot completely unchanged, that same straddle could reprice closer to ₹420 — pure vega, no move in the underlying involved at all.