🎓 Topic of the Week: Why Earnings Trades Beat 0DTE: A Smarter Way to Use Volatility to Your Advantage

You’ve likely heard the buzz: Zero-Day-to-Expiration (0DTE) options are “the future” of trading. They’re fast. They’re cheap. And they’ve become the high-octane playground of both retail thrill-seekers and institutional players chasing short-term edge.

But here’s the problem: the game is rigged against the undisciplined—and most traders are stepping onto a field they don’t fully understand.

In contrast, earnings-based trades—like the ones I teach in The Implied Perspective—are grounded in repeatable setups that use inflated implied volatility, clear statistical edges, and probability-based frameworks to make risk-defined bets that can actually be managed with consistency.

Let’s break down why 0DTE options look attractive—but why earnings trades are a more sustainable, smarter alternative.

The 0DTE Appeal (and Trap)

0DTE options—contracts that expire within hours—have exploded in popularity.
But it’s not just gamblers buying long-shot calls anymore. These days, 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.

• You get same-day resolution.

• There’s always a setup to trade.

And when markets are calm, it works—until it doesn’t.

Here’s the problem:

• Time decay is working for you... until price action isn't.
  One sharp move and your high-probability short spread is underwater—fast. With 0DTE, there’s no buffer. You don’t get second chances.

• You’re not selling inflated volatility.
  Most 0DTE setups have compressed IV, especially midday. That means you're selling cheap premium with little edge. There’s no event behind the move—just noise.

• 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.

• There’s no catalyst—just randomness.
  Unlike earnings trades, where volatility is expected to contract, 0DTE premium sellers are betting against volatility without knowing what’s coming.

• You're trading against machines.
  Institutions use these instruments to adjust gamma exposure and scalp microstructure edges. Retail traders are often just feeding the system, not exploiting it.

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

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

Earnings Trades: Why Elevated IV Works in Our Favor

Now let’s talk about why earnings-based options trades, particularly the way I structure them, are far more favorable for both new and experienced traders:

1. Implied Volatility is Predictably Elevated

Heading into earnings, 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 ±6%, but actual post-earnings moves often fall within ±3–4%. That’s an exploitable discrepancy between expected and realized volatility.

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

2. Defined Events = 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.

Here are the types of trades I focus on when trading around earnings announcements:

• Iron Condors placed just outside the expected move.
  → Ideal for neutral outlooks with defined risk and range.

• Short Strangles in high-IV names.
  → Wider profit zones for traders comfortable managing undefined risk.

• Jade Lizards that cap upside risk while eliminating downside assignment risk.
  → A smarter way to sell premium without naked call exposure.

• Bear Call Spreads just above the expected move.
  → Bearish-to-neutral setups that benefit from IV collapse and rangebound action.

• Bull Put Spreads just below the expected move.
  → Bullish-to-neutral trades that profit from post-earnings stability.

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

Compare that to 0DTE trades—where direction, volatility, and news are entirely up in the air. There’s no catalyst. There’s no model. There’s just chaos.

3. Edge Comes from the Math, Not the Guesswork

Some traders defend 0DTE strategies by pointing out:
“I’m not buying lottery tickets — I’m selling premium.”

Fair point. And selling premium can be smart. But not all premium-selling is created equal.

While 0DTE sellers are typically selling SPX or SPY options with hours to go until expiration, they’re still flying blind in a market with no catalyst, minimal IV edge, and extremely high gamma exposure. You’re hoping for stability — but you have no event-based reason to expect it.

That’s where structured earnings trades offer a distinct advantage.

I build around predictable, time-bound events with inflated implied volatility that we can sell into. It’s not just about selling theta — it’s about selling mispriced fear.

Here’s how I do that:

• ✅ Use the Expected Move as the Trade Blueprint
  The market gives us its projected move 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’s probability-backed premium selling, not hope-based.

• ✅ Exploit Volatility Expansion — Then Let It Collapse
  Unlike 0DTE trades, where IV is often flat or falling, earnings trades benefit from elevated IV. I step in at peak fear — and profit as that fear fades immediately after the announcement.

• ✅ Overlay IV Rank, IV Percentile, and RSI Extremes
  These added filters help us find the best setups: stocks where the options are overpriced relative to history, and where the underlying may be stretched (via RSI) ahead of the event. That gives us multiple layers of edge.

• ✅ Trade Positive Theta With a Catalyst Behind It
  In 0DTE, you’re collecting theta in a vacuum — with no known reason for the market to stay calm. In earnings trades, time decay accelerates in our favor once the event passes, and I have a strong statistical basis to believe the move will stay contained.

Put another way:

0DTE premium sellers are collecting nickels in front of an unpredictable bulldozer.
We’re collecting dollars around scheduled events where the odds are stacked more clearly in our favor.

Same concept (selling premium), totally different approach.

Put simply: 0DTE traders rent probability. We structure it.

4. Risk Management is Baked In

With earnings-based strategies, risk management isn’t an afterthought—it’s 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 position size according to expected move and volatility regime. The result? A portfolio that’s built, not guessed.

In contrast, most 0DTE premium-sellers treat each trade as a standalone bet:

• There’s often no broader portfolio integration.

• Trades are clustered around the same underlying (usually SPX or SPY).

• Exposure stacks up day after day—without diversification by sector, IV context, or strategy type.

And while 0DTE trades may appear small individually, the compounding effect of multiple highly correlated short-dated spreads can become a hidden risk amplifier, especially during market stress.

Volatility clustering isn’t hypothetical—it’s the norm.
And in a one-ticker, one-day framework, you have nowhere to hide when it hits.

I don’t rely on hope or hedges. I rely on structure—because that’s what keeps you in the game when randomness rears its head.

The Bottom Line: Thrill vs. Edge

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 let’s be honest: speed isn’t strategy. It’s stimulation. And while collecting premium in the morning and closing by the bell might feel productive, without structure and context, it’s just another dopamine loop.

Earnings trades—when built around elevated implied volatility and expected move probabilities—offer something 0DTE setups don’t: a repeatable edge.

You’re not guessing direction. You’re not exposed to sudden news headlines or intraday chop. You’re trading around a known event, with volatility at your back, and a risk-defined framework in front of you.

I don’t chase every opportunity. I focus on the ones with edge, structure, and a measurable advantage.

Because building a trading business isn’t about placing trades. It’s about building a portfolio—one intelligent position at a time.

You can read more about how I approach earnings trades in my Featured Report: Earnings Season Options Trade: A Step-by-Step Guide. Explore the in-depth, quantitative approach to the best strikes, probabilities, and setups for earnings trades: learn the mechanics of the high-probability approach.

📬 If you enjoyed this breakdown, don’t miss next week’s Educational Corner in The Option Premium—your go-to source for clear, actionable options education.

Probabilities over predictions,

Andy Crowder

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