I’ve been trading earnings mostly using short-dated options and trying to stay focused on volatility rather than direction. My usual approach is looking at ATM or slightly OTM structures 1-3 DTE when IV rank is elevated but not extreme. In some cases I lean toward defined-risk plays like iron butterflies instead of naked straddles to control downside.
Lately I’ve noticed that in certain names IV crush seems less predictable, especially when the move happens pre-market and follows through weakly during regular hours. I’m trying to better understand how others adjust position sizing or structure selection when the expected move is priced aggressively but sentiment feels one-sided.
For those who trade earnings regularly, how do you decide when IV is truly overpriced versus justified, and how do you protect against scenarios where the move happens but premiums still collapse faster than expected?