Earnings Playbooks walks through how implied volatility, price gaps, and sector sympathy moves actually behave around a company's earnings report, before, during, and after the print.
What Earnings Playbooks Covers
Every quarter, a subset of the market faces a known, scheduled event that most other trading days do not have: a company confirming to the market exactly how its business performed, followed by management guidance about what comes next. Earnings playbooks is the study of how options pricing, positioning, and sector-level participation behave differently around this known event window, before the print, in the minutes after it, and in the days that follow as the broader sector digests the news. It is not about predicting whether a specific company will beat or miss; it is about recognizing the distinct market-structure phases that a known catalyst creates, so a trader can interpret volume, implied volatility, and price action correctly in each phase.
Before the Print: Implied Volatility Build and the Expected Move
Options are priced, in large part, on time value and uncertainty. As an earnings date approaches, the implied volatility (IV) embedded in that company's options tends to rise, because the market knows a discrete, binary event is coming, and option sellers demand more premium to carry that risk through the report. This rising IV, combined with the option's remaining time to expiry, produces what is commonly called the expected move, a rough, market-implied range for how far the stock might travel by the time those options expire, typically approximated from the price of an at-the-money straddle.
The expected move is not a prediction of direction; it is the market's collective estimate of magnitude. Watching how quickly IV builds into the print, and how volume compares with existing open interest at nearby strikes, gives a trader a read on how convicted or uncertain positioning looks heading into the release. Volume that clearly exceeds prior open interest suggests new positioning is being added, while volume trading into strikes that already carry large open interest is more ambiguous, since it may represent adjustment or hedging of an existing position rather than a fresh directional bet.
After the Print: Gap Acceptance and IV Crush
Once the numbers are public, the uncertainty that inflated implied volatility disappears almost immediately, producing what traders call IV crush, a sharp collapse in implied volatility because the discrete event risk the market was pricing has now resolved. This crush happens regardless of whether the stock gaps up, down, or barely moves, and it means an option's price can fall sharply even for a trader who correctly guessed the direction of the move, if they overpaid for volatility that was always going to evaporate once the news was out.
Separately from the volatility crush, the stock itself typically gaps to a new price level at the open, and the first minutes or hours of trading tend to resolve into one of two behaviors: gap acceptance, where the stock holds and builds value around the new level, or gap rejection, where the initial move fails and price rotates back toward the prior range. Distinguishing between these two outcomes involves the same kind of evidence used elsewhere in market-structure reading: volume at the new level, how quickly any pullback gets absorbed, and whether follow-through volume actually supports the gap rather than merely testing it once.
A Simplified Comparison
| Phase | What Typically Happens | What a Trader Is Watching For |
|---|---|---|
| Pre-earnings | IV builds, expected move widens | Volume versus open interest at nearby strikes |
| Immediately after | IV crush, initial gap | Whether the gap holds or fills |
| Following days | Sector digestion, sympathy moves | Whether peers confirm or diverge |
Sympathy Moves and the Sector Earnings Cycle
Earnings are not scattered randomly through the calendar; companies within the same industry tend to report in loose clusters, commonly described as a sector earnings cycle, with major banks early in a reporting season, large technology names in a later wave, and retailers later still. Because investors often use one company's results as a proxy for how its close peers are likely to perform, a strong or weak print from an early reporter inside a sector can produce a sympathy move in other companies within that same sector, days or even weeks before those peers report their own results.
This matters for a trader who is not directly positioned around a specific earnings date, because a sector ETF or a related large-cap name can move meaningfully on someone else's news. Recognizing a sympathy move for what it is, a read-through reaction rather than new company-specific information, helps a trader avoid mistaking correlated sector drift for an independent signal about the peer company itself.
A Concrete Walkthrough
Consider an illustrative example: a large-cap technology name reports earnings after the close and beats revenue expectations with strong forward guidance. Implied volatility on that name collapses overnight as expected, and the stock gaps up several percent at the open. In the trading session that follows, volume builds steadily above the gap level rather than fading back into the prior day's range, which is consistent with gap acceptance. At the same time, a handful of other companies in the same sector, none of which have reported earnings yet themselves, trade higher in sympathy, on the assumption that similar underlying demand trends likely apply to them as well.
A trader studying this sequence is not trying to predict tomorrow's earnings report from a different company; they are recognizing which part of the sector earnings cycle is playing out, so that a move in an unrelated stock gets correctly attributed to sympathy rather than treated as an independent, self-contained signal.
What Earnings Playbooks Do Not Tell You
None of this framework predicts whether a given company will beat or miss its own numbers, and it does not turn implied volatility or expected-move data into a directional signal. IV crush happens whether a trader is on the right or wrong side of the move, and gap acceptance can still fail hours or days later on broader market weakness that has nothing to do with the original earnings report. Sympathy moves can also reverse sharply once the peer company actually reports and its own numbers diverge from the assumption the market was making. Earnings-cycle awareness is best used to correctly label what phase of the cycle a stock or sector is in, not to forecast an outcome before the numbers are known.
Risk disclosure. This preview is educational content from the Earnings Playbooks module of the OptionFlow & OrderFlow Education Library. No trade signals, no buy/sell recommendations, no profit claims, no performance promises. Trading involves risk of loss, including the possible loss of all invested capital. Past patterns do not predict future results. The Education Library and the GEX Levels Indicator are sold separately.
Earnings Playbooks in the full Library. This free preview covers the core ideas. The paid Education Library includes 3 full lessons in the Earnings Playbooks module alone — part of 435 written lessons across 18 modules for one-time $249.99, lifetime in-site access. See the full curriculum or get the Library.