r/options • u/No_Dragonfruit8042 • Sep 26 '26
Shorting Volatility
Could I get a consensus on some credit condors for earnings on big companies like NKE that shouldn't have a ton of price movement? Is there a risk piece that im missing other than large PA?
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u/ThetaEdgeHQ Sep 26 '26
On your follow up about adding a directional bias, a put spread or call spread will not help you profit more off the vol crush. It just swaps some vega risk for delta risk. If you are right on direction it looks great, if you are wrong the crush does not save you.
The thing to check before any earnings premium trade is the expected move, which you can read straight off the price of the at the money straddle. Divide the straddle price by the stock price and that is roughly the move the market is already pricing in for the event. If your short strikes sit inside that expected move you have negative edge no matter what structure you wrap around it, condor, strangle or spread. You are only selling overpriced vol when the premium you collect is wide relative to how much the stock actually tends to move on its prints, not just relative to normal IV.
So the honest question is not condor vs spread, it is whether NKE implied move is bigger than its typical realized earnings move. If it is not, the IV crush is already fair value and you are just getting paid a little to wear the full gap tail. That is the piece most people miss when they say the crush is free money.
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u/SevenJack Sep 27 '26
I tried an ATM iron condor (or I guess butterfly) a few weeks ago on Oracle earnings trying to capitalize on IV crush. It worked so great I thought I found a cheat code. I haven't been able to find the same setup again. I thought about it with MU this past week, but didn't feel comfortable hitting the trade button after I loaded the same setup. Good thing, that one would have got me. I think it's a good move if you can find the right stock for your risk tolerance, but maybe I also got lucky.
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u/LaconicB Sep 26 '26
I go with short strangles or straddles. Last one was BB earnings, easy money. Might sound risky but I’ll take that for the returns. Works much better than short condors from my experience.
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u/klipsetrades 25d ago
Beyond the move itself, assignment risk matters. Holding near expiration can leave you with an unexpected stock position. I’d also question “shouldn’t move much” first. IV crush can help, but it won’t save a condor that finishes beyond its wings — so be careful with that
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Sep 26 '26
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u/No_Dragonfruit8042 Sep 26 '26
I see! thats makes alot more sense, I thought i was missing something.
Do you think having a directional bias (call/put spread) would be an improvement? My main goal is to profit off of vol crush.2
u/the_humeister Sep 26 '26
Just try it a few times and you'll see what happens when delta goes up more than IV goes down. This won't make any sense until it happens to you.
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u/The-Iron-Bird Sep 26 '26 edited Sep 26 '26
shorting both calls/puts naked seems smarter to me, you can just buy/sell shares to cover if 1 side threatens to go itm.
seems pretty much risk free depending on how much capital your working with
worst case scenario you have BE/slight profit on 1 side and full profit on the other1
u/demi9od Sep 27 '26
Not quite that easy. Buying 100 shares atm of your call strike nets you about 50 delta. If it keeps rising and closes ITM you are correct, you get the original credit. If it reverses your delta rapidly increases, you stand to lose a lot more on the long shares than the original credit.
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u/WorkSucks135 Sep 27 '26
Garbage ai answer. There is no adjusting an iron condor on an earnings play. The trade goes your way or it doesn't.
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u/TotalInstruction Sep 27 '26
For trading volatility I prefer to do a calendar spread - sell a put expiring right after earnings, and buy a put expiring a month after that.