How to Manage Earnings Volatility: Three Options Strategies for Investors

With earnings season underway, many investors holding profitable stocks may be nervous about post-earnings volatility — and for good reason. Even strong companies can see share prices tumble if results or guidance disappoint. Instead of selling out early, here are three options strategies investors can consider to protect gains or generate income:

1. Hedge with Protective Puts
If you're holding profitable stocks but worried about downside risk after earnings, consider buying put options to create a "protective put" strategy. This involves holding the stock while purchasing a put option with a strike price near a level you'd be comfortable exiting.

• If the stock falls, the put option gains value, partially offsetting the loss.

• If the stock drops below the strike, you can exercise the put, effectively selling the shares at the strike price — locking in gains or capping losses.

  （Source：Tiger Academy）

This strategy offers a safety net without having to prematurely sell the stock ahead of results.

2. Lock in Gains with Covered Calls
For investors looking to take profits while still holding onto the stock, covered calls can be a smart move. This involves selling call options against your existing stock holdings.

• Choose a strike price above the current stock price — ideally a level at which you'd be happy to sell.

• If the stock rises to or above the strike price at expiration, your shares are called away, and you collect the premium plus your stock gains.

（Source：Tiger Academy）

During earnings season, elevated implied volatility often means higher premiums, making this strategy particularly attractive.

3. Use a Collar Strategy for Balanced Protection
To combine the benefits of both strategies, consider a Collar — which involves:

• Holding the stock

• Selling a call option (covered call)

• Buying a protective put option

（Source：Tiger Academy）

This approach limits both downside and upside but can be implemented at little to no net cost, as the premium received from selling the call can often offset the cost of buying the put.

The Collar strategy is especially popular during periods of elevated uncertainty, like earnings season, offering defined risk and reward without abandoning long positions.

Bottom Line:
Earnings reports can bring volatility, but with the right options strategies — protective puts, covered calls, or collars — investors can better manage risk, lock in gains, or generate income while holding strong positions.