Earnings season feels like a gold rush for both investors and traders.
But for options traders, the stakes are higher. Volatility spikes. And the potential for a sharp move in either direction draws in risk-takers. Yet beneath the excitement lies danger: IV crush, overpriced premiums, and the risk of getting stuck with shares you never wanted.
So how do you trade options ahead of earnings without stepping into the usual traps?
Let’s break it down.
Earnings season is the period each quarter when publicly traded companies release their financial results. These reports often trigger major stock price movements and increased market volatility making it an opportunity (and risk zone) for traders.
Earnings announcements are typically released after the market closes or before it opens, and a single line in the report whether it’s revenue, EPS, or forward guidance can sometimes send a stock soaring or crashing within minutes.
Traders can track upcoming earnings dates using free and paid platforms such as:
Knowing exactly when an earnings event will occur allows you to plan weeks or even months ahead, especially if you're building multi-leg spreads that rely on time decay (theta) or volatility contraction (IV crush).
Trading during earnings season is not about just when the earnings are released, it’s about careful planning and research months before earnings reports. Savvy traders start preparing 1–2 months in advance by identifying stocks that fit the strategy. Early preparation gives you the flexibility to layer into spreads, avoid overpaying for inflated options, and optimize your risk/reward profile well before the crowd jumps in.
One of the biggest traps in earnings trading is IV crush.
Big scheduled events (earnings announcements, FDA rulings, product launches, Fed decisions, etc.) inject uncertainty. Traders bid up IV beforehand, because no one knows whether the news will be good, bad, or shocking. The moment the news drops, that uncertainty is gone. The event is now known, so there’s less reason to price in a huge future swing. When IV drops quickly after the event—often within seconds—option premiums collapse. That instant markdown is called IV crush. It can wipe out a chunk of an option’s value even if the stock barely budges.
It’s possible to lose money on a winning trade, just because IV collapsed
That’s why advanced traders use spreads verticals, calendars, or proprietary setups like our Earnings Sniper Spread™ to neutralize IV crush and structure better risk-reward trades.
While IV crush hits hard after earnings, time decay (theta) eats away at your option premium every single day — especially in the final weeks before expiration.
Some traders try to play earnings with simple calls and put to bet on a directional move. Not only is there the danger of IV crush and time decay, you are playing with a 50:50 probability.
It’s a high-cost and low-certainty strategy which is not ideal for consistent profits.
A more advanced tactic is the vertical debit spread — for example, buying a call and selling a higher strike call.
Benefits:
However, during earnings season, even spreads are priced with elevated premiums. And if the stock stalls or moves only slightly, your spread could expire near worthless. You’ve capped your loss but haven’t solved the low probability issue.
A bull call spread is a vertical debit spread that traders use when they’re moderately bullish on a stock. The strategy involves buying a call option at a lower strike price and simultaneously selling another call at a higher strike price, both with the same expiration date. It is a lower-cost alternative to simply buying a call outright, while still allowing you to profit from a rise in the stock’s price.
On the other hand, a bear put spread is used when you have a moderately bearish outlook. This tactic involves buying a put option at a higher strike and selling a put at a lower strike, again with the same expiration. The long put profits if the stock falls, while the short puts offset some of the premium cost.
Bull call spreads and bear put spreads rely on correctly predicting the stock’s direction, which makes them risky during earnings—if the stock moves opposite your bet, both legs can lose value despite the volatility. Earnings events often deliver unexpected results, making directional trades like these less reliable.
Some traders use what we call the Earnings Probability Spread (EPS) — a low-cost, high-reward setup designed to profit from significant earnings moves.
Here’s the trade-off:
While the risk/reward look attractive on paper, the probability of success is still often low.
To address these weaknesses, our options trading mentor BangPham Van developed the proprietary Earnings Sniper Spread™ — an optimized spread designed specifically for earnings trades.
The Earnings Sniper Spread™ has been back tested to show positive results. Achieving a 69% win rate and 25% average ROI.
Past performance of any methodology does not necessarily indicate future results
It’s engineered to:
It’s a tactical framework designed to help stack the odds more favorably during earnings seasons.
Trading during earnings season is a skill. And like any skill, it requires practice, precision, and the right tools.
Many traders burn accounts trying to time a single earnings play with a call or put. Others use tactics that look good on paper but struggle to win consistently. The edge comes from understanding the mechanics of volatility, decay, and risk and using strategies like the Earnings Sniper Spread™ to stack the odds in your favor. If you want to learn exactly how to trade Earnings Sniper Spread™ along with many more time-tested trademark techniques by Bang Pham Van, check out our Past performance of any methodology does not necessarily indicate future results
It’s engineered to:
Capture profit regardless of direction
Neutralize IV crush using smart leg construction
Use precision strike selection to build a favorable payoff zone
It’s a tactical framework designed to help stack the odds more favorably during earnings seasons.