Know the priced-in move
The Earnings desk shows each company's expected move and, after the report, the actual move. Historically, many stocks move less than priced in — which is why selling premium is popular — but big misses happen, which is why defined risk matters.
Common approaches (examples, not advice)
- Directional view: a call or put spread instead of a single option, to offset IV.
- Expect a quiet report: an iron condor outside the expected move, with defined max loss.
- Expect a huge move: a long straddle or strangle — needs a move bigger than priced in.
- Own shares: a collar to protect against a gap down.
After the report
Compare the actual move to the expected move. Over several quarters, that tells you whether a stock tends to over- or under-deliver — a useful input for next time.