What is the difference between a straddle and a strangle?

A straddle buys a call and a put at the same at-the-money strike. A strangle buys an out-of-the-money call and an out-of-the-money put at different strikes. The straddle costs more but has closer breakevens; the strangle is cheaper but needs a bigger move.

Is a straddle or strangle better for earnings?

It depends on the expected move. A straddle is better when you expect a large move and want tighter breakevens; a strangle is better when you want lower cost and the stock has a history of very large moves. Both are long volatility and both suffer IV crush if held through the report.

Do straddles and strangles lose money on IV crush?

Yes. Both are long premium, so the post-earnings collapse in implied volatility works against them. The actual move must beat the implied move enough to overcome IV crush and time decay for the trade to profit.

Calendar Spreads Around Earnings: Selling the Front IV

Sell the expiry that carries the event, own the one that doesn't. How earnings calendars work, when they win, and what a big move does to them.

A calendar spread sells an option in the near expiration and buys the same strike in a later one. Around earnings that pairing gets interesting for one reason: the event premium is not spread evenly across expirations — it is concentrated in the front expiry that contains the report. A calendar is how traders sell that concentration.

How it's built

Same strike, two expirations: short the front-expiry option (the one that captures the earnings date), long the same strike in a later expiry. Done with calls or puts, usually at-the-money, for a net debit. The short leg carries the inflated pre-earnings IV; the long leg's IV is much closer to normal.

Why earnings distort the trade

In quiet markets a calendar is mostly a bet on time decay. Into a report it becomes an IV-structure trade. A live example from our own term-structure data, August 27, 2026: AVGO reports September 2, and its front-expiry ATM straddle trades at 86.7% IV against 68.9% for the very next expiration — an 18-point premium in the front purely for the event. NVDA, one day after its report with the reaction session still open, shows a 28-point gap for the same reason. The short front leg is what gets hit by IV crush the moment results are out; the long back leg keeps most of its value. That asymmetry is the calendar's engine.

What has to go right — and what kills it

Wins when the stock stays near the strike: the front leg's event premium evaporates while the back leg holds — the spread widens.
Loses on a big move: far beyond the implied move, both legs converge toward intrinsic value and the spread collapses toward zero. A calendar is a short-volatility position on the event even though it is long an option.
The back leg is not immune: post-earnings, later expirations lose some IV too — just far less than the front.
Assignment risk on the short leg if it goes deep in the money through the print.

Calendar vs. straddle vs. condor

A long straddle needs the move to beat what options priced; an iron condor needs it to stay inside; a calendar also wants a quiet print, but instead of selling naked wings it finances the position with the one thing that reliably deflates — front-expiry event IV. The cost is a capped, tent-shaped payoff centered on the strike.

Members Whether the front IV is actually rich is measurable, not guessable: the IV Rush Radar tracks each name's front-expiry IV against its own historical pre-earnings ramp, and the Simulator prices either leg's straddle with IV crush modelled, so you can rehearse the post-print outcome before putting the spread on.

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Frequently asked questions

Is a calendar spread long or short volatility into earnings?

Structurally it is long a later-dated option, but around earnings it behaves short-volatility on the event: it profits when the realized move stays small and the front expiry's inflated IV collapses after the report.

Which strike should an earnings calendar use?

Most earnings calendars are placed at-the-money, where the front expiry carries the most event premium and the payoff tent is centered on the current price. Strikes away from the money turn it into a directional bet.

What happens to a calendar spread after IV crush?

The short front leg loses most of its event premium immediately, which the spread captures as profit if the stock stayed near the strike. The long back leg usually gives up some IV too, but far less.

What is the biggest risk of holding a calendar through earnings?

A move far beyond the implied move. Deep in- or out-of-the-money, both legs trade near intrinsic value, the time-value difference vanishes, and the spread can lose most of the debit paid.