Earnings season is when most traders make their biggest mistakes. They hold their full position through the announcement, watch the stock gap up — then sit frozen while the premium on their calls starts to collapse.
The move already happened. And if you’re still in after the news, you’re probably too late.
This isn’t about direction. It’s about timing your exit when volatility is at its peak. That’s where the real edge is — not in guessing whether the report will beat or miss, but in unloading when everyone else is chasing.
Peak Vol Is Your Exit Signal
Take Tesla (TSLA) as an example. Say the company beats earnings and the stock gaps up $20. Everyone rushes in. Retail piles into calls. Analysts upgrade it.
That’s your exit — not your entry.
By the time the news hits, the move is mostly done. Implied volatility starts to collapse and the premiums on your options bleed out fast.
The same thing happens after FDA announcements, analyst upgrades or any known news event. The trade is over once everyone else finds out. Post-catalyst is when volatility contracts and the stock either grinds sideways or gives back gains.
Earnings Aren’t for Chasing
Traders who understand the game are selling into the move. I love to build a position in the weeks or days leading into the earnings event, then unload on pops and maybe leave a lone runner or just a couple of contracts open for the event itself for a shot at a grand slam.
That’s why you’ll see big open interest clear out on the first green candle. The institutions were in early, and they’re getting out while retail scrambles to get in.
So if you’re holding calls and the event plays out in your favor, don’t wait. The best trades are done when everyone else is just getting started.
Order Flow:
This is for informational and educational purposes only. These are not official alerts issued by Lance, but rather some interesting orders picked by the team at Lance Ippolito Trading.
When you look at these plays, always take the market maker move into consideration.
You can be right on the direction but still lose money if the stock doesn’t move enough. That’s where the market maker move comes in clutch.
With puts, they’re often downside hedges in case a stock tanks, especially around earnings. The further out of the money they are, the more likely they are to be hedges.
Also be sure and check when the company’s earnings date is because many of the plays we post here are centered around earnings!
And finally, always remember the golden rule when it comes to buying calls: Buy dips, sell rips — and don’t chase!
If a stock’s moved a ton already today, maybe wait for a pullback.
There is inherent risk in trading. Trade at your own risk.
Note: If no date is listed after the month, it’s the monthly expiration (third Friday).
The team at Lance Ippolito Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
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