The Event
RBI’s MPC kept the repo rate unchanged at 5.25% for a third straight meeting, holding a neutral stance. GDP growth forecast was cut, inflation forecast was raised — a “hawkish hold.”
How the Market Reacted
Nifty 50 slipped 0.21% to close near 23,367. IT and metal stocks led the fall while banking largely held its ground. Nothing dramatic on the index — but that’s not where the real story was.
What Happened in Options
The real action was under the surface:
→ IV had been building into the policy day, pricing in uncertainty
→ Once the “no surprise” decision landed, IV compressed fast — classic post-event crush
→ Traders who bought straddles expecting a big move got squeezed by IV, even on the side that was directionally right
→ Premium sellers who wrote ahead of the event pocketed the decay
The Lesson
This is the pattern almost every scheduled event follows: uncertainty pumps IV before, resolution collapses it after. Direction matters less than most beginners think — what kills buyers is holding through the IV crush, not being wrong about the move.
Takeaway for your watchlist
Before your next RBI/Fed/Budget trade: check where IV sits relative to its recent average, not just where price might go.