Earnings season can create some of the biggest opportunities—and risks—for options traders.

But before jumping into a trade, it’s important to understand how earnings reports impact options pricing.

One of the biggest factors is implied volatility (IV).

Leading up to an earnings announcement, IV often increases as traders anticipate a big move.

This inflates option premiums, making contracts more expensive.

However, after the report is released, you may see IV drop, causing option prices to fall even if the stock moves as expected.

This is known as a volatility crush.

The market doesn’t just react to the numbers—it reacts to how those numbers compare to expectations.

A company could report strong earnings, but if the forecast disappoints, the stock may still drop.

Understanding this dynamic is essential when trading options around earnings events.

The bottom line is that earnings season provides volatility… and volatility is a great opportunity to profit from.

There are many strategies to take advantage of earnings volatility, whether you’re looking to profit from inflated premiums or hedge against potential moves.

The key is knowing when and how to enter trades that align with the market’s expectations.

At NavigationTrading, we teach traders how to navigate earnings season with confidence, using strategies designed to maximize opportunity while keeping risk in check.

Earnings season is full of potential—make sure you’re trading it the right way!

– The NavigationTrading Team