Lesson

Earnings gap defense | Options Educator

Preview IV crush paths and drill post-earnings adjustment playbooks.

In this lesson

The Earnings Event Landscape

• Earnings happen every ~3 months
• Numbers AND guidance both move stocks
• Whisper numbers often higher than published
• Beating estimates doesn't guarantee stock goes up

Understanding IV Around Earnings

• IV peaks just before earnings
• IV crushes 40-60% after earnings
• Expected move = straddle price / stock price
• Options often overestimate the move

Earnings Options Strategies

• Straddles bet on large moves but fight IV crush
• Selling strategies collect IV premium but have risk
• Spreads define risk for directional plays
• Post-earnings options are cheaper due to IV crush

The Post-Earnings Gap Playbook

• Gap and Go continues, Gap and Fade reverses
• Wait at least 1 hour before trading the gap
• Use defined-risk strategies post-earnings
• Analyst activity can cause secondary moves

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