Dangers of Earnings Date Near Expiration
Dangers of Choosing an Option with an Earnings Date Prior to Expiration
Covered calls and other option strategies can be a great way to earn income — but only if you manage the risks properly. One of the biggest beginner mistakes? Choosing an option that expires after an earnings report. Let's break down why this is dangerous and how you can avoid it.
Why Earnings Reports Are a Risk
An earnings report can cause a stock’s price to jump or crash — often unpredictably. If you sell a covered call and earnings happen before expiration, you could:
- 📉 Miss out on a major upside if the stock spikes and gets called away
- 💥 Watch the stock plunge, leaving you with a loss larger than the premium collected
- 🎢 Face wild volatility and regret not waiting for earnings to pass
Real-World Example
Suppose you sell a call on a stock trading at $50 with a strike of $52. The company reports earnings two days before expiry, and the stock jumps to $60. Your upside is capped at $52, and you miss out on the rest — not to mention your stock is called away.
How Optrader.ca Helps
Optrader.ca automatically filters out stocks with earnings reports before option expiry. This means:
- 🚫 No unexpected earnings traps
- 📊 Better risk control on covered calls and puts
- 💡 Peace of mind knowing your trade isn’t vulnerable to surprise volatility
Conclusion
Always check the earnings calendar before placing an options trade. With tools like Optrader.ca, you can screen smarter and protect yourself from costly mistakes — especially when it comes to unpredictable earnings announcements.
