Earnings to Supplement Durational Trades

This is a really bad environment for options traders (most of my readers). The vix is sitting at 13.65, so it is not a great environment for strategic options traders due to the little cost basis reduction available (small options premiums). Therefore, a lot of traders like me are a little bummed, but there is some wonderful opportunity hundreds of times every quarter. EARNINGS SEASON. That is right earnings. Earnings possess a great opportunity for options traders due to earnings volatility crush (when implied volatility falls after the binary event risk goes away). Volatility gets pumped coming into earnings, but a options trader can take advantage of this by doing specific options trades. These trades despite risky can significantly make up for low volatility. The key is to stay small. Stocks are very unpredictable in nature especially going into earnings, but volatility is predictable and mean reverting in nature and therefore can be predicted. I will warn you from buying volatility into earnings. Statistically buying volatility into earnings loses money. Actually, buying a straddle into earnings in AAPL, GS, and IBM (picked at random) made money 30% of the time. However, selling wide strangles into earnings made money around 70% of the time. I recommend for sure selling volatility into earnings, but please make sure you have at least 6 months of trading experience before you dive in.