The ability to predict IV will give you a head start when trading options. I thought it useful to start a repository of common implied volatility (IV) patterns. This can then be used as a reference handbook for trading decisions or for searching trading opportunities.
Please feel free to add your favourite pattern to this repository as we go along. Let's start a convention whereby the contributor has the privilege of naming the IV pattern.
I'll start with the She'll Be Fine pattern. This is a well documented pattern whereby a steadily rising underlying leads to a falling IV. One of the reasons given is that complacency sets in, fear recedes and demand for options dwindle.
Typically, when the underlying starts to fall rapidly after the steady rally, fear sets in and demand for options increase, leading to increased IV.
The attached chart of the recent dip in XJO after a long steady rally, shows this clearly. XJO plunging around the end of October led to a rise from a low of 20% to a high of more than 25%.