Earnings trades attract options traders because they combine high premiums, predictable volatility patterns, and well-defined opportunities to structure risk. But they also require a clear understanding of how implied volatility behaves before and after earnings. In this interview, we explore a systematic approach to earnings trades that helps traders benefit from IV crush while avoiding common pitfalls.

Learn about earnings trades in this video

Daniel Nikolaides

Daniel Nikolaides is a Germany-based options trader with a background in law and a deep focus on volatility. He trades earnings events systematically using a mix of statistics, volatility analysis, and clear risk rules. His expertise lies in timing the IV ramp-up and collapse around earnings and building defined-risk structures such as iron condors, flies, and calendars.

Why earnings trades matter

Earnings season is one of the most active periods for options traders. Volatility increases, premiums expand, and the market prices in uncertainty. As soon as the results are released, that uncertainty disappears — and implied volatility typically collapses. This dynamic creates opportunities for traders who understand how to structure earnings trades around predictable volatility behavior.

In this interview, Daniel breaks down exactly how he approaches earnings trades, step by step. His method combines historical analysis, IV behavior, liquidity filtering, market-maker positioning, and careful trade selection.

Understanding IV behavior around earnings

One of the strongest points Daniel makes is that IV consistently ramps up before earnings and drops sharply after the announcement. This pattern fuels the logic behind most short-volatility earnings trades.

He explains it through a simple analogy:

• Before earnings: IV inflates like a balloon
• After earnings: the balloon deflates
• The collapse in IV helps short-premium trades become profitable quickly

According to Daniel, this behavior is so consistent that it becomes the foundation for selecting setups — iron condors, skewed flies, broken-wing butterflies, and sometimes calendars.

A tool to analyze earnings trades

A central part of Daniel’s approach is his use of Earnings Watcher, a tool that helps him analyze earnings events with precision.

Instead of manually digging through option chains and historical data, he relies on Earnings Watcher to surface liquid stocks, implied moves, historical ranges, volatility patterns, and statistical edge in seconds. This allows him to stay systematic, avoid emotional decisions, and build earnings trades based on clear data rather than guesswork.

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How Daniel selects stocks for earnings trades

1. Start with liquidity

Daniel only trades liquid underlyings. Tight bid/ask spreads and weekly options are essential for clean fills and fair pricing. He avoids smaller tickers with poor liquidity unless the premium is unusually compelling.

2. Study historical earnings moves

The next step is understanding how the stock has moved historically. Daniel compares:

• Average actual move
• Implied move priced in today
• Standard deviation ranges

A good trade candidate is one where the implied move is larger than the typical historical move. That gap creates edge for short volatility.

3. Check asymmetry

Some stocks move much more to one side than the other. If, for example, a stock frequently sells off after earnings, Daniel may skew his trade structures to better cover the downside.

4. Evaluate market-maker positioning

Daniel also looks at:

• Delta exposure
• GEX levels
• Option flow in the last days before earnings

These metrics can reveal magnets or levels where the stock may gravitate once volatility collapses.

Which strategies he uses for earnings trades

Daniel uses three main structures, each with a specific purpose.

Iron condors

Iron condors work best when the stock has balanced historical moves and no strong skew. Daniel places his wings just outside the historical average move plus standard deviation. He enters trades in the last 15 minutes before the market closes just before the earnings release, when IV is highest.

Butterflies and broken-wing butterflies

Daniel prefers butterflies when he expects smaller moves. If the historical behavior shows downside bias, he uses broken-wing flies to strengthen protection on the weak side.

He likes flies because they are:

• Defined risk
• Cheap to enter
• Highly sensitive to IV collapse

Calendars

Calendars come into play when the expected move is very small and front-month IV is inflated relative to the back month.

He often chooses:

• Short: nearest expiration after earnings
• Long: about 30 days out

A put calendar works well if the stock tends to drift down after earnings. A call calendar works best if the drift is upward.

How he manages risk on earnings trades

Daniel’s risk-management rules are clear:

• He uses 2% of buying power on most earnings trades
• Up to 6% on very liquid names like NVDA

Losses are part of the game, he emphasizes. You cannot avoid them — but you can size them correctly and manage them systematically.

How to choose between the strategies

Daniel selects each structure based on the combination of historical patterns and current market conditions:

• Iron condor → balanced moves, no clear skew
• Broken-wing butterfly → directional drift or asymmetry
• Calendar → small expected move + inflated front-month IV

He also adjusts structure placement based on GEX levels, delta exposure, and key liquidity levels.

Key takeaways from the interview

1. IV behavior around earnings is predictable

Volatility inflates ahead of the event and collapses afterward — and you can trade that cycle.

2. You need data to trade earnings safely

Historical moves, implied moves, liquidity, and positioning matter far more than “gut feeling”.

3. Defined-risk structures work best

Iron condors, flies, and calendars each play a specific role. Pick the one that fits the underlying and what the historical data shows.

4. Position sizing is non-negotiable

Even the best setups can fail. Controlling size protects you over dozens of earnings cycles.

5. Tools matter

Platforms like Earnings Watcher help speed up analysis and avoid costly mistakes.

Books recommended in this video

• Adam Warner: Options Volatility Trading
• Mark Douglas: Trading in the Zone

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