Since May 2025, Freedom24 analysts have been offering clients a potentially high-yield strategy: trading short-term options on company stocks before earnings announcements.

The results are impressive: the average return on ideas with the correct forecast of price direction was 148%, while in the most successful cases returns exceeded 400%.

Explore this strategy in advance to take advantage of market volatility during the upcoming earnings season.

Results of our ideas

Over the past five months, we have published 27 speculative ideas based on buying CALL and PUT options on company stocks ahead of earnings reports, depending on the expected price movement. Of these, 20 stocks showed sufficient volatility for at least one of the options to deliver a positive return.

The average return on correctly chosen options was +148% at the closing price, and when calculated at the best intraday price, it reached +161%.

The top-performing ideas delivered maximum returns above 400%: eBay (444% at the best price and 438% at closing), Box (424% and 345%), and Nike (400% and 330%). Overall, the five best ideas showed results ranging from +210% to +438% at the closing price (average return: +329%), while at the best intraday prices returns ranged from +323% to +444% (average return: +389%) (see Table 1).

Table 1. Table 1. Return on CALL/PUT options depending on stock movement and price level

Source: Freedom24

The strategy of purchasing both CALL and PUT options in equal proportions on the same stock also delivered strong results (see Table 1: Portfolio 1 shows results at the closing price, while Portfolio 2 reflects results at the midpoint between the closing price and the day’s best price).

The strongest returns came from option portfolios on eBay (170% for Portfolio 1 and 171% for Portfolio 2), Box (123% and 143%), Nike (115.5% and 133%), and Abbott Laboratories (112.3% and 140%). These results highlight the effectiveness of diversification within this approach.

Risks

Seven stocks displayed insufficient volatility, which caused both types of options to lose value. The largest losses were seen in Dropbox options (-69% for CALLs at closing and -72% for PUTs at closing), PDD Holdings (-13.3% and -74.2%), and Alphabet (-43.5% and -57.9%).

The Dollar Tree idea (-77.3% and -22.2%) proved unusual: the day before earnings release, the company’s stock surged 6.01% on news unrelated to quarterly performance, only to decline 8.37% the following day.

Nonetheless, even when some trades fell short, this option strategy ensures controlled risk, as the maximum potential loss is limited to the premium paid for the option — making it predictable and manageable.

What’s the idea?

The earnings release can act as a powerful catalyst for stock price movements — shares often rise or fall sharply depending on the strength and expectations of reported results. This forms the basis of a popular speculative strategy: buying short-term CALL or PUT options on a stock depending on the anticipated direction of price movement.

Options are typically purchased a few hours before the earnings release and sold the following day. During this window, volatility tends to spike, creating opportunities to profit. With the correct forecast on price direction, the strategy can deliver significant gains in a very short time.

There are two main ways to apply this strategy. The first is to analyze a particular stock and buy options in one direction — either CALLs or PUTs — based on your outlook. This approach offers higher upside but carries more risk. The second method is to purchase both CALL and PUT options in equal proportions. While potential profits are smaller, the risk is also reduced, as gains from the winning side help offset losses from the other.

Ready to capture the next move?

Trading short-term options ahead of earnings announcements may suit investors seeking non-standard trades with clearly limited risk and high potential returns. We regularly share ideas for this strategy in the Investment Ideas section, so you can act on the market events that matter most.

Find your next investment idea with Freedom24

* Your capital is at risk.

The ability to provide access to particular financial instrument is subject to an appropriateness test.

Information presented herein is not to be construed as a solicitation or an offer to buy or sell any Financial Instrument or to participate in any trading strategy.

Past investment results do not guarantee future returns. The company does not ensure nor promise future returns on investments and does not guarantee the reliability of potential investments and stability of the size of the returns.

It is important to do your own analysis before making any investment. If needed, you should carefully seek independent investment advice from a certified professional.

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