Options Strategies for Earnings Season

Overview

Options offer defined-risk earnings plays. Learn straddles, strangles, iron condors, and calendar spreads for capturing earnings volatility — or selling it. Analyse real-time pricing on the options chains page and record results in the trading journal. Refine your edge with the strategies library for volatility-specific setups.

Key Takeaways

• Long straddle/strangle: profit if the stock makes a big move in either direction. Risk: IV crush if the stock doesn't move enough.
• Short strangle/iron condor: profit if the stock stays within a range. Risk: unlimited (strangle) or defined (iron condor) if it gaps hard.
• Calendar spread: sell short-dated pre-earnings options, buy longer-dated — profits from IV crush on the short leg.
• IV typically peaks the day before earnings and collapses immediately after — the 'IV crush'.

Practical Tips

• Compare the option-implied expected move to the stock's average historical earnings move — if implied > historical, selling premium has an edge.
• Use iron condors (not naked strangles) for defined risk on premium-selling strategies.
• Close trades the morning after earnings — don't let theta erode a winning position.