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.

IV Term Structure Into Earnings: Contango vs Backwardation

Why the expiry containing the report trades at a far higher IV than the next one — and what that curve tells you about every earnings trade.

Pull up an option chain the week of an earnings report and the strangest number is not any single IV — it is the gap between expirations. The expiry that contains the report trades at a far higher implied volatility than the one right behind it. That curve across expirations is the IV term structure, and around earnings it is the clearest picture of where the market has parked the event.

Contango, backwardation, and what earnings do

In calm conditions the curve slopes gently upward — later expirations carry slightly more IV, because more time means more uncertainty (contango). An earnings date inverts it: the report's expected move must fit inside the front expiry, so its IV inflates far above the rest (backwardation). The steeper the inversion, the more move the market expects from the event itself — and the more premium there is to crush the moment results are out.

A live example

From our term-structure data, August 27, 2026: AVGO reports September 2. Its front-expiry ATM straddle trades at 86.7% IV; the very next expiration trades at 68.9% — nearly an 18-point cliff between two expiries days apart, existing only because one of them contains the report. NVDA, the morning after its own print with the reaction session still running, shows 91.9% against 63.7%: the event is not fully resolved until the reaction day closes, and the curve knows it.

Why the structure matters for every earnings trade

It is the bridge between the IV rush and the IV crush: the rush is the front expiry's IV climbing day by day into the print; the crush is that same IV collapsing back toward the rest of the curve afterward. The term structure is the snapshot in between.
It tells you which expiry actually carries the event — buying the "cheap" later expiry to trade earnings means owning an option that barely responds to the report.
It is the raw material of calendar spreads: the front-vs-back IV gap is precisely what a calendar sells.
Flat structure into a report is information too: little event premium priced means the market expects a routine print — and cheap optionality if it is wrong.

Members The platform computes this live from the chain for any name — front vs next expiration, straddle prices and the IV gap — alongside the IV Rush Radar's history of how each name's front IV typically builds, and the Simulator to price a structure on either expiry with the crush modelled.

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Frequently asked questions

What is IV term structure?

The curve of implied volatility across option expirations for the same underlying. Upward-sloping (contango) is normal; an earnings report inverts it, putting the highest IV in the expiry that contains the event.

Why is front-expiry IV so high before earnings?

The expected earnings move has to be priced into whichever expiration captures the report date. Compressed into a few days of remaining life, that expected move translates into a very high annualized IV for the front expiry alone.

What happens to the term structure after the report?

The front expiry's event premium evaporates — the IV crush — and the curve typically relaxes back toward its normal gentle upward slope within a session or two.

How do traders use the term structure around earnings?

To pick the right expiry for the trade: long-volatility trades need the expiry that responds to the event, short-volatility and calendar trades sell the front expiry's inflated IV against a calmer later one, and a flat curve flags a print the market considers routine.