How do you trade earnings with options?

Short answer

Options price a stock's earnings move in advance through higher implied volatility. After the report, that extra volatility collapses (IV crush), so a stock can move your way and the option can still lose value. Traders compare the expected move with past moves and usually use defined-risk spreads.

Before the report

Find the expected move: the at-the-money straddle price for the first expiry after earnings.
Compare it with the stock's last 8 earnings moves.
If options price more than it usually moves, selling premium (defined risk) has the edge; if less, buying has the edge.

Common earnings structures (examples, not advice)

Debit spread: a cheaper directional bet with capped loss.
Iron condor: profits if the stock stays inside a range; loses on a big gap.
Calendar: sells the expensive pre-earnings option against a later one.
Wait and trade after: let IV crush happen, then trade the trend.

Risks

Earnings gaps can jump straight past your strikes, and options may open far from yesterday's price. Size so a full loss is acceptable.

Common questions

What is IV crush?

The sharp drop in implied volatility right after earnings, which cuts option prices even if the stock moves.

Is it better to buy or sell options before earnings?

It depends on whether options look expensive versus past moves. Sellers win more often but take bigger losses on surprises.

When are this week's big earnings?

Ask Rebel Intel for this week's earnings calendar with expected moves.

Go deeper with Rebel Intel

Which big companies report earnings this week?What is the expected move for NVDA earnings?Compare AAPL's expected move with its past earnings moves

Educational only, not investment advice. Options involve risk and are not suitable for all investors. See how Intel is reviewed.