Earnings Trades vs 0DTE Options: Why Structured Volatility Selling Beats Same-Day Speculation

Earnings trades built around elevated implied volatility and the expected move provide a repeatable, probability-based edge that 0DTE options cannot match. While both approaches involve selling premium, earnings trades exploit a measurable discrepancy between expected and realized volatility, whereas 0DTE trades sell cheap premium with no catalyst, extreme gamma risk, and no structural advantage.

You have likely heard the buzz: zero-day-to-expiration options are "the future" of trading. They are fast. They are cheap. And they have become the high-octane playground of both retail thrill-seekers and institutional players chasing short-term edge.

But here is the problem: the game is tilted against the undisciplined, and most traders are stepping onto a field they do not fully understand.

In contrast, earnings-based trades are grounded in repeatable setups that use inflated implied volatility, clear statistical edges, and probability-based frameworks to make risk-defined trades that can actually be managed with consistency.

I do not sell premium just because it is there. I wait for moments where fear is overpriced, events are scheduled, and implied volatility gives us room to breathe.

Why 0DTE Options Look Attractive but Carry Hidden Risks

Zero-day-to-expiration options, contracts that expire within hours, have exploded in popularity. Daily transaction volume in 0DTE options now represents over 43% of total S&P 500 options volume. But popularity is not the same as edge.

Many retail traders are selling premium on SPX, SPY, or QQQ, hoping to profit from intraday stability and rapid time decay. The logic makes sense on the surface: you collect premium fast, get same-day resolution, and there is always a setup to trade. When markets are calm, it works. Until it does not.

Risk 1: You Are Not Selling Inflated Volatility

Most 0DTE setups have compressed implied volatility, especially midday. That means you are selling cheap premium with little edge. There is no event behind the move, just noise. Compare this to earnings trades, where IV reliably spikes ahead of the announcement, creating an exploitable discrepancy between what the market expects and what actually happens.

Risk 2: Gamma Risk Is Extreme

The closer you get to expiration, the more violently delta shifts. Your short strike can go from comfortable to breached in minutes, especially on SPX. With 0DTE options, there is no buffer and no second chance. A single sharp intraday move can turn a high-probability short spread underwater before you can react.

Risk 3: There Is No Catalyst

Unlike earnings trades, where volatility is expected to contract after a known event, 0DTE premium sellers are betting against volatility without knowing what is coming. You are hoping for stability, but you have no event-based reason to expect it.

Risk 4: You Are Trading Against Machines

Institutions use 0DTE instruments to adjust gamma exposure and scalp microstructure edges. Retail traders are often just feeding the system, not exploiting it. The playing field is not level.

Risk 5: Correlated Risk Compounds Quietly

Most 0DTE premium sellers cluster trades around the same underlying, usually SPX or SPY. There is no diversification by sector, IV context, or strategy type. While individual trades may appear small, the compounding effect of multiple highly correlated short-dated spreads becomes a hidden risk amplifier during market stress. Volatility clustering is not hypothetical. It is the norm.

At a glance, 0DTE premium selling feels like a consistent strategy. In reality, it is often short-term edge hunting in a long-term uncertainty game.

How Earnings Trades Exploit Elevated Implied Volatility

Earnings-based options trades, structured the way I approach them, offer a fundamentally different value proposition. The edge does not come from speed or frequency. It comes from selling mispriced fear around a known event.

Implied Volatility Is Predictably Elevated Before Earnings

Heading into earnings announcements, implied volatility reliably spikes. This provides an opportunity to sell overpriced premium. Take a name like AAPL or AMD: the implied move may be priced at plus or minus 6%, but actual post-earnings moves often fall within plus or minus 3% to 4%. That is an exploitable discrepancy between expected and realized volatility.

In contrast, 0DTE trades often have no such IV spike. You are trading a decaying asset with no cushion of inflated premiums.

Defined Events Create Defined Timeframes

Earnings announcements are known. Dates are public. Volatility expansion is predictable. These factors allow for structured setups designed around both the expected move and the volatility crush that typically follows the event.

This is the critical difference between earnings trades and 0DTE options: earnings trades are built around a scheduled catalyst with a predictable IV pattern. 0DTE trades are built around nothing but hope that the market stays calm for a few hours.

The Edge Comes from Math, Not Guesswork

Some traders defend 0DTE strategies by pointing out that they are selling premium, not buying lottery tickets. Fair point. Selling premium can be smart. But not all premium selling is created equal.

0DTE sellers are typically selling SPX or SPY options with hours to go until expiration in a market with no catalyst, minimal IV edge, and extremely high gamma risk. They are hoping for stability without a statistical reason to expect it.

Earnings traders sell into predictable, time-bound events with inflated implied volatility. It is not just about selling theta. It is about selling mispriced fear.

The 5 Earnings Trade Strategies I Use Around Announcements

When trading around earnings, I focus on five specific strategies, each selected based on the IV environment, the expected move, and my directional outlook.

Iron condors placed just outside the expected move. This is the workhorse earnings trade for a neutral outlook. You sell both a call spread and a put spread outside the expected range, creating a wide profit zone that benefits from IV crush and range-bound price action. Risk is defined on both sides.

Short strangles in high-IV names. For traders comfortable managing undefined risk, short strangles in names with extremely elevated IV offer wider profit zones and maximum benefit from the volatility crush. These require more active management but capture more premium.

Jade lizards that eliminate upside assignment risk. A jade lizard combines a short put with a bear call spread, creating a position where you cannot lose on the upside as long as the credit received exceeds the call spread width. This is a smarter way to sell premium without naked call exposure.

Bear call spreads just above the expected move. When the outlook is neutral to bearish, selling a call spread above the expected move allows you to profit from IV collapse and rangebound action with defined risk.

Bull put spreads just below the expected move. When the outlook is neutral to bullish, a put spread below the expected move profits from post-earnings stability and premium decay.

These are trades based on math, not mystery. I use the expected move to guide strike selection and implied volatility to guide strategy choice.

The 4-Pillar Framework for Structuring Earnings Trades

Every earnings trade I place follows a structured four-pillar framework that ensures I am not just selling premium blindly, but selling it at the right time, at the right strikes, with confirming signals.

Pillar 1: Use the Expected Move as the Trade Blueprint

The market gives us its projected range into earnings. I sell outside of that range using strategies like iron condors, jade lizards, bear call spreads, or bull put spreads, all with well-defined risk and clear profit zones. It is probability-backed premium selling, not hope-based.

Pillar 2: Sell Into Peak Fear, Then Let It Collapse

Unlike 0DTE trades where IV is often flat or falling, earnings trades benefit from elevated implied volatility. I step in at peak fear and profit as that fear fades immediately after the announcement. This IV crush is the single most reliable source of edge in earnings options trading.

Pillar 3: Overlay IV Rank, IV Percentile, and RSI Extremes

These added filters help identify the best setups: stocks where options are overpriced relative to history (confirmed by IV Rank and IV Percentile), and where the underlying may be stretched ahead of the event (confirmed by RSI). Multiple layers of edge stacked on top of each other.

Pillar 4: Trade Positive Theta With a Catalyst Behind It

In 0DTE trading, you collect theta in a vacuum with no known reason for the market to stay calm. In earnings trades, time decay accelerates in your favor once the event passes, and you have a strong statistical basis to believe the move will stay contained.

0DTE premium sellers collect nickels in front of an unpredictable bulldozer. Earnings traders collect dollars around scheduled events where the odds are stacked more clearly in their favor. Same concept. Totally different approach.

Why Risk Management Is Built Into Earnings Trades

With earnings-based strategies, risk management is not an afterthought. It is embedded in the design.

Each trade is risk-defined. Each ticker is selected for its IV profile, correlation, and timing. I ladder across uncorrelated names, stagger durations, and use position sizing according to expected move and volatility regime. The result is a portfolio that is built, not guessed.

In contrast, most 0DTE premium sellers treat each trade as a standalone bet. There is often no broader portfolio integration. Trades cluster around the same underlying. Exposure stacks up day after day without diversification by sector, IV context, or strategy type. And in a one-ticker, one-day framework, you have nowhere to hide when volatility hits.

I do not rely on hope or hedges. I rely on structure, because structure is what keeps you in the game when randomness shows up.

The Bottom Line: Speed Is Not Strategy

For some traders, selling premium with 0DTE options feels like a smart way to harness time decay. The trades are fast. The feedback is immediate. And on quiet market days, it might even look easy.

But speed is not strategy. It is stimulation. Collecting premium in the morning and closing by the bell might feel productive, but without structure and context, it is just another dopamine loop.

Earnings trades, built around elevated implied volatility and expected move probabilities, offer something 0DTE setups do not: a repeatable edge. You are not guessing direction. You are not exposed to sudden headlines or intraday chop. You are trading around a known event, with volatility at your back and a risk-defined framework in front of you.

I do not chase every opportunity. I focus on the ones with edge, structure, and a measurable advantage. Because building a trading business is not about placing trades. It is about building a portfolio, one intelligent position at a time.

0DTE traders rent probability. We structure it.

Probabilities over predictions,

Andy Crowder

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This newsletter is for educational purposes only and should not be considered investment advice. Options trading involves significant risk and is not suitable for all investors. Past performance does not guarantee future results. Always consult with a qualified financial professional before making investment decisions.