#Earnings — Just a quick note to share an observation. While volatility typically keeps rising in the weeks and days before earnings, the same is not always true in the hours before the close… If selling naked options or credit spreads, it is often much better to sell in the morning before the release, whether than waiting until afternoon. The problem with selling early is if the stock makes a big intraday move, which can throw off your trade dynamics before the close. But often, an intraday move won’t matter; the drop in IV will overpower a move in the stock.

Take my PCLN trade from this morning, STO Feb 19th 875/900/1275/1300 iron condor for 1.35. Since I traded it, PCLN has moved UP 35 points, or 3%. However, the condor has already bled out. The call side alone was sold for .75 and now is trading for about the same, even though we’ve had a 3% move against the calls. The put side has dropped from .75 to .25.

Just something to keep in mind. I’ve heard some say they that last half-hour before earnings is highest IV. This is normally not true (although it is sometimes). Best IV is most usually in the first half-hour, even on earnings days.