Anyone out there running a strategy of selling calls just before earnings and buying them back after an IV crush. I don’t mean on volatile stuff but on rather boring companies that don’t see a lot of surprises and price movement? I generally avoid writing CC’s around earnings, instead collecting dividends, the selling a call after the ex-dividend date (usually weeklies) but recently got told I’ might want to look at this a iv crush strategy, Thoughts? Pros;cons? Tickers?
**UPDATE**:
Thanks for the responses. I did more digging and thinking about this and I think the person who suggested I look into this was missing out on much better strategies. First I’m not particularly fond of CC’s after a number of years trying them. It’s the old 90% wins offset by the 5% or 10% losers kind sucks the wind out of the smallish returns CC’s bring. I was fooling myself by believing a long stock holding had several ‘tranches’ of risk but reality suggests otherwise. And the value investor mindset I came in with was really flawed - undervalued companies are undervalued for damn good reasons!
From that perspective taking a slice of that risk only and leaving the rest of your capital out of the trade by using spreads is much less risk. And PMCC’s don’t stand up either when you calculate returns based on at risk capital and not annualizing some premium from a weekly CC you wrote against your LEAP. Yes you can make this work but the returns are not as good as other strategies.
I have come to believe instead of trying to exploit IV crush it’s better to take the opposing view and exploit IV expanding. Like selling spreads 3 or so weeks ahead of earnings and closing them out the day before. Or using plain vanilla spreads or calendar spreads or even ratio synthetics to try to align with an event. They just increase your horsepower. Why the heck I wasted so much time wandering around in the Options wilderness I’ll never know.
Tell me I’m dumb or know nothing about options is fine. I believe in Dunning-Krueger with all my heart.