Sometimes that's smart. Sometimes it's how you lose a month's income in a day. Let's look at the data.
Why Earnings Premiums Are So High
Before earnings, nobody knows if NVDA will beat estimates by 20% or guide down. That uncertainty gets priced into options as elevated implied volatility (IV). A stock that normally has 35% IV might trade at 60-80% IV heading into the print.
Higher IV = higher option prices = fatter premiums for sellers.
After earnings, the uncertainty resolves. IV collapses (the "IV crush"), and option prices fall 30-60% overnight regardless of which direction the stock moves. This is why selling options into earnings is tempting — the IV crush works in your favor as a seller.
Mag 7 Earnings Moves: What the Data Shows
Average post-earnings stock move over the last 8 quarters:
| Stock | Avg Earnings Move | Largest Move | Implied Move (recent) |
Key insight: NVDA's most recent earnings (Feb 2026) had the lowest expected move in three years — just 5.6%. The market is getting better at pricing NVDA, which means less surprise and more predictable IV crush. That's actually better for premium sellers.
Strategy 1: Sell Options AFTER Earnings (Lower Risk)
The play: Wait for the earnings announcement, let IV crush do its thing, then sell options when the post-earnings price has settled.
Why it works: After earnings, IV drops to normal levels and the next catalyst (usually the next earnings in 3 months) is far away. You're selling options in a low-IV environment where the stock is less likely to make big moves.
The trade-off: Lower premiums. You missed the elevated pre-earnings premium.
Best for: Beginners and conservative traders. This is the safe approach.
Example: NVDA reports earnings on Feb 25. On Feb 26, IV has crushed from 65% to 38%. You sell a 30-day covered call or CSP. The premium is 30-40% less than it would have been a week ago, but your risk of a big unexpected move is also much lower.
Strategy 2: Sell Options BEFORE Earnings (Higher Risk, Higher Reward)
The play: Sell options 1-2 weeks before earnings when IV is elevated, then close after earnings when IV crushes.
Why it works: You're selling expensive options and buying them back cheap. The IV crush alone can make the option lose 40-60% of its value overnight.
The trade-off: If the stock makes a big move, the directional loss can overwhelm the IV crush benefit.
Example with NVDA: One week before earnings, you sell a $210 covered call (10% OTM) when NVDA is at $193. Premium: $5.80/share ($580). NVDA reports in-line and opens at $196. IV crushes from 65% to 38%. The call is now worth $1.20. You buy it back for $120, netting $460 profit in one week.
But if NVDA gaps to $215: Your call is now deep in the money. It's worth $8-10+. You lose $220-420 on the option position (or your shares get called away). The fat premium didn't save you.
Best for: Experienced traders who understand IV mechanics and can manage risk.
Strategy 3: Sell Options That Expire BEFORE Earnings
The play: Sell options that expire the week before earnings. You collect elevated premium (because IV is rising) but you're never exposed to the actual earnings move.
Why it works: IV tends to start rising 2-3 weeks before earnings. You can sell a 14-day option during this ramp and close or let it expire before the announcement.
The trade-off: Shorter expirations have lower total premium (even if the IV is elevated). And if earnings get moved up or a pre-announcement happens, you're caught.
Best for: Traders who want to benefit from IV expansion without taking the binary earnings bet.
Strategy 4: The Iron Condor (Advanced)
The play: Sell both a call spread and a put spread around earnings, betting that the stock stays within the expected range.
Example with NVDA at $193, expected 6% move ($11.58):
If NVDA stays within $176.50-$209.50 (the expected range plus your premium buffer), you profit. If it moves more than that, you lose — capped at $550.
In NVDA's Feb 2026 earnings, the stock moved less than expected (5.6% vs 7.6% average). An iron condor seller would have profited handsomely as both wings expired worthless after IV crush.
Best for: Experienced options traders comfortable with multi-leg strategies.
The Rules of Engagement
Rule 1: Never sell your first covered call or CSP through earnings. Learn the strategy in a normal, low-catalyst environment first. Earnings add a layer of complexity that beginners don't need.
Rule 2: Size down. If you normally sell 3 contracts, sell 1 around earnings. The payoff variance is 3-5x higher than normal.
Rule 3: Define your max loss. Before selling, know exactly how much you're willing to lose and at what point you'll close. "I'll close if NVDA gaps above $215" is a plan. "I'll figure it out" is how you get hurt.
Rule 4: Check the expected move. Your broker shows the expected move (usually displayed on the options chain). If the market expects a 6% move, selling a call 4% OTM is a coinflip. Selling 10% OTM is much safer.
Rule 5: Know the earnings date. This sounds obvious but it's not — Mag 7 earnings dates can shift. NVDA has announced earnings on different weeks in different quarters. Check the actual confirmed date, not last quarter's schedule.
Which Mag 7 Stocks Are Best for Earnings Plays?
Safest for earnings options selling: AAPL, MSFT — smaller moves, more predictable reactions.
Highest reward (but highest risk): NVDA, TSLA — large moves, huge IV crush when it works in your favor.
Best risk/reward balance: META, GOOGL — meaningful IV expansion but moves are usually within expected range.
Avoid for earnings plays: TSLA as a beginner — the moves are too erratic and the stock reacts to factors beyond the earnings report itself.
Model It First
OptionsPilot's calculator factors in IV levels and helps you pick strikes that account for expected earnings moves. Before selling options into any Mag 7 earnings event, run the numbers on different scenarios and know your risk.