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Selling puts after earnings: less premium, fewer surprises

Once the earnings report is out, put premiums usually drop. You get paid less, but the biggest scheduled gap of the quarter is behind you. For many sellers, that's the better deal.

Options guide · 8-minute read · Updated 2026-10-26

The short answer

After an earnings report, Implied volatility usually falls fast. That drop is called IV crush. Put premiums shrink with it.

So a put sold the day after earnings usually pays less than one sold the day before. In return, the stock has no scheduled report for about three months. A 30- to 45-day put sold after the report usually expires before the next one.

You're giving up some premium to remove the one overnight gap you can see coming. That's why many sellers wait for the report to pass.

What changes after the report

Three things usually shift once the numbers are out.

1. The premium shrinks. The market no longer needs to price the report, so the extra drains out. Our IV crush guide shows how fast.
2. The stock often calms down. The big unknown is known. Daily moves tend to settle, though not always.
3. You know more. You've seen the results and the outlook. You can decide whether you still want to own the business at your strike.

None of this removes the risk. Markets fall for many reasons besides earnings. But the largest scheduled risk is out of the window.

A worked example (an illustration, not a trade idea)

A made-up stock, XYZ, trades at $50 the day before earnings. A 30-day $45 put pays $1.80, because the report is inside the trade.

You wait. The report is fine. The next morning XYZ trades at $49, and IV has dropped. The 30-day $45 put now pays $0.75.

You sell one and collect $75. Your broker holds $4,500. Break-even is $44.25. The next report is about three months away, well after expiry.

The day-before seller collects $105 more. They also carry a gap risk the day-after seller doesn't. The before-earnings guide shows what that gap can cost.

Every outcome at expiry

Here's the day-after trade, the $45 put sold for $0.75:

The stock can still fall to $40. That would take a slow slide or some other surprise, not a scheduled report.

When the stock gapped down on the report

Sometimes the report is bad. Say XYZ drops from $50 to $38 overnight.

Puts on XYZ may still look rich afterward, because the stock is moving a lot. It's tempting to think, "It's already down. I'll sell a put and get paid on the bounce."

Slow down first:

• Read why it fell. A one-time miss is different from a cut outlook or a broken business.
• Give it a few days. Stocks that drop on bad news can keep drifting lower for a while. Check where the last place price turned around is on the chart.
• Pick the strike from what you'd pay now. Not from where it traded last week.
• Check that the business still passes your rules. If you'd no longer buy it, don't sell a put on it. See cash-secured put exit rules for setting your plan up front.

A lower price is only a discount if the business is worth what it was.

A routine after earnings

1. Before the report: note the date and do nothing. Write down the strike area you'd consider afterward.
2. The morning after: read the headline results and the outlook. Note how far the stock moved.
3. Check the premium. Is a put at your price still worth selling after the crush? A very small premium may not cover the bid-ask spread and fees.
4. Pick an expiry that ends before the next report. Usually 30 to 45 days is well clear.
5. Pick an out-of-the-money strike from the price you'd pay. Our out-of-the-money puts guide shows how delta sets the cushion.

Run this way, the wheel strategy mostly sells puts in the quieter middle of each quarter.

Questions