Got hit hard by iv crush after earnings last month. Lost about 40% even though I was right about the direction.
How do you guys handle this? Been trading options for a while but still struggle with volatility timing.
Maybe I should stick to longer expiry dates or avoid earnings completely.
Calendar spreads help avoid IV crush. Short the front month, long the back month. Profits arise when volatility decreases post-earnings.
Exit timing makes or breaks earnings trades. Stopped watching just price and started setting IV alerts instead.
Once IV drops the day before earnings, closing profitable positions is key. It doesn’t matter if the stock’s moving my way - theta crush can kill gains fast.
Sizing smaller on earnings plays now makes sense. The risk just isn’t worth going big.
That earnings pain hits hard. Lost $800 on AAPL calls two years back even though the stock went exactly where I thought it would.
I’ve completely flipped my approach now. Instead of buying options before earnings, I sell them when IV shoots up.
Made $300 in premium on Netflix last quarter with iron condors. Let time decay work for me instead of eating my lunch.
Earnings plays are different from regular options trading. Buy positions 2-3 weeks out when IV is low, then sell before the announcement when volatility increases. Don’t hold through the event unless you’re selling premium. Using spreads is better than straight calls or puts because the short leg helps cushion the IV crush. I learned this after getting burned several times by holding single options through earnings.
Selling premium worked for me too. It helps dodge those IV crush hits.