How To Find Options Trades This Earnings Season

Earnings season is here and we've got the first batch of big name companies reporting earnings this week with Taiwan Semiconductor (TSM), JP Morgan Chase (JPM), Wells Fargo (WFC), Bank of America (BAC), Goldman Sachs (GS) and Unitedhealth Group (UNH) all set to report.

Earnings season can supercharge option premiums. But not all setups are worth chasing.

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The key is narrowing your focus to a handful of trades where risk and reward are actually in your favor.

Here's a framework to help you identify high-quality setups, avoid traps, and capitalize on elevated implied volatility.

Implied volatility is always higher into earnings, but that doesn't mean it's high enough.

That tells me the current IV is elevated relative to the past year. These are the names where options are most overpriced.

Avoid tickers with low IV Rank, even if they have earnings coming up.

Liquidity matters, especially with earnings trades where you might need to adjust quickly.

If you're trading multi-leg strategies like iron condors or butterflies, liquidity isn't optional—it's mandatory.

Strategy choice depends on the expected move, the volatility crush, and your directional bias (if any).

Neutral bias + high IV: Consider iron condors or short strangles. Sell premium and play for a post-earnings volatility collapse.

Bullish bias + high IV: Sell put spreads or naked puts just outside the expected move. These often perform well when a stock beats modest expectations.

Bearish bias + high IV: Use call credit spreads or bearish calendars. Watch for crowded long setups—disappointment can cause outsized moves lower.

The best trades are structured outside the expected move range.