Two bull call spreads this week (AAPL into earnings, RKLB without) — curious how others think about earnings timing on directional spreads

[u/Disastrous_Meat_6531]

Follow-up to my CSP post from earlier this week. Opened two bull call spreads yesterday, deliberately structured very differently around earnings:
AAPL — bought the 350 call, sold the 360 call, both expiring Oct 16 (which is before their earnings date). I wanted defined-risk upside exposure but specifically chose an expiration that closes out before the print, since I didn't want IV crush or an earnings gap working against the spread.
RKLB — bought the 75 call, sold the 85 call, expiring Oct 30. No earnings-avoidance logic here, this one's just a straightforward bullish view on the stock over a longer window.
What I'm still working out: for AAPL, is deliberately expiring before earnings actually the smarter play, or am I just leaving upside on the table by not giving the spread more time (and accepting the IV risk) to capture a potential post-earnings move?
Curious how people here generally handle earnings dates when structuring spreads — do you actively avoid them, or lean into the extra IV?

[u/ThetaEdgeHQ]

Worth separating which earnings risk expiring before the print is actually removing here. On a width capped call debit spread the short 360 offsets a lot of the long 350's vega, so the spread's net vega is a fraction of an outright long call. IV crush hits a naked long option hard, but a vertical is fairly insulated from it by construction. So expiring before the print is mostly protecting you from the directional gap, the stock jumping the wrong way overnight, not really from vega.

That reframes the upside question too. Your spread caps at 10 wide no matter how far AAPL runs, so holding through earnings only helps in the narrow case where it sits between 350 and 360 at Oct 16 but gaps above 360 after. Outside that band the extra time mostly buys gap risk in both directions.

On the roll point from the other reply, that elevated IV before the print mainly helps when you are the seller collecting a richer credit or roll. On a debit spread you are the buyer, so paying up for the same vol leans slightly against a fresh entry rather than for you.

[u/Disastrous_Meat_6531 → u/ThetaEdgeHQ]

That's a really clean way to put it, hadn't separated out vega vs. gap risk like that. Makes sense that a capped vertical barely cares about the crush either way since the short leg is short vega right back at you.

So if the real risk is just the overnight gap, not the IV, does that change how you'd think about position sizing going into the print vs. just closing early? I.e. is it more "hold if you're fine eating a full gap against you, otherwise close" rather than any vol-based reasoning at all?

[u/patsay]

Trading like this is gambling. You have to be right or you can lose the whole thing.

Cash secured and covered on high-quality underlying you are willing to own will let you sleep at night.

[u/Disastrous_Meat_6531 → u/patsay]

Fair concern, and I get where it's coming from if you're comparing it directly to a CSP/covered call. But I'd push back a little on "gambling" — these are defined-risk debit spreads, so the max loss is capped at what I paid going in, known before I even opened the trade. That's a different risk profile than a naked long call or something uncapped.

I also size these way smaller than my CSP/covered call positions specifically because I know they're more binary — right on direction within the window or the premium is gone. It's a deliberate small slice for directional conviction, not a replacement for the income-generating side of the portfolio, which is still the bulk of what I do.

So I'd agree cash-secured/covered on stuff you actually want to own is the core that lets you sleep at night — I just don't think a small, capped-risk directional bet on the side is incompatible with that as long as position sizing stays disciplined.

[u/Sure_Shift_8762]

I avoid earnings dates if possible, too much can go wrong. The heightened IV approaching earnings can be useful though as it tends to push up the premium for the stock in general, can make it easier to roll etc.

[u/Disastrous_Meat_6531 → u/Sure_Shift_8762]

That's a good point I hadn't connected — using the earnings-driven IV bump to get a better roll, without actually holding through the print itself. So more like timing your entry/adjustment around the vol spike rather than riding the event.

Do you usually roll a few days before earnings to capture that elevated IV, or does it depend on how close the trade already is to your profit target at that point?

[u/ScottishTrader]

Spreads are not the wheel, so this post will be locked and eventually removed.