Earnings season is a magnet for bad decisions.
Every quarter, traders crowd into weekly options on the hottest names, chasing the idea that a blowout number will make them rich overnight.
They’ll load up on calls right before earnings, hoping for a Netflix-style gap higher … only to watch the stock move sideways and their options get obliterated.
And every quarter, I say the same thing:
The real money in earnings season isn’t in the earnings announcement. It’s in the aftermath.
Trading options into earnings is usually a sucker’s game because the options market isn’t stupid.
It prices in a move before the numbers hit.
That means you’re paying a steep premium just to play, and unless the stock beats expectations and the guidance is solid and the market reacts well, you’re often left holding a bag of overpriced, worthless options the next morning.
I learned this the hard way early in my career.
I once bought out-of-the-money calls on Cisco the day before earnings — the report was strong, but the stock barely moved.
I lost 80% of the premium in one day. It was a real lesson on how Wall Street really works.
Now I don’t touch pre-earnings lotto tickets.
Instead, I focus on post-earnings drift.
It’s where smart traders clean up, so pay attention as I walk you through it.
Nuts and Bolts
Here’s how it works:
After a company reports earnings, all the “uncertainty” disappears.
Implied volatility collapses, so the options get cheap again.
But if a stock gaps higher (or lower) after earnings and starts trending, that move often continues for days or even weeks.
That’s the post-earnings drift, and it’s something traders often miss.
Institutions that liked the numbers will keep buying, while hedge funds that missed the move are chasing.
The weak hands are out of the way.
And because the options are cheaper now, the risk/reward starts to make sense.
So here’s the takeaway:
Skip the hype.
Let the amateurs blow their cash on pre-earnings gambles, then come in with a clear head and trade the reaction, not the guesswork.
Look for strong trends developing after a solid earnings beat or miss.
Wait for a confirmation candle — ideally a close above the gap high or below the gap low.
Then step in with a directional trade using short-term calls or puts.
And remember, the edge in this game comes from thinking a step ahead, not reacting to headlines, but positioning smartly when the odds are finally in your favor.
This earnings season, don’t play the guessing game.
Play the reaction.
That’s how real traders get paid.
Stay street smart,
Jeff Zananiri
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Supernova stocks.
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*Past performance does not indicate future results. Results not typical.
