Trading Nvidia’s Earnings: Iron Condor vs. Short Strangle
Earnings season is a playground for traders, but like any playground, there’s risk at every turn. Nvidia (NVDA) steps into the spotlight this week, bringing with it the kind of implied volatility that options traders dream about—and, if unprepared, can quickly turn into a nightmare.
The goal here isn’t to gamble on a price move. It’s to methodically structure trades where risk is controlled, probabilities are in our favor, and the edges are repeatable.
These are two ways to navigate earnings while capitalizing on volatility crush. Whether you prefer the defined risk of an iron condor or the higher premium of a short strangle, the key is structuring trades that thrive on probabilities, not predictions. Here are two examples…focus on the mechanics, the probabilities and risk-management.
Breaking Down an Earnings Iron Condor on NVDA
With Nvidia trading near $127, the options market is pricing in a ±$14 expected move heading into earnings, placing the implied range between $113 and $141. That’s the foundation of our trade—positioning short strikes beyond this range to maximize our probability of success.
You don’t need a crystal ball when history already lays the odds on the table. A quick glance at Nvidia’s historical earnings reactions—readily available on Slope—reveals a pattern: most of its post-earnings moves at the opening bell have landed within a ±10% range.
That’s not an ironclad guarantee, but it’s a crucial data point. When structuring trades like iron condors or short strangles, the goal isn’t to predict the move—it’s to position yourself where probabilities lean in your favor. If history is any guide, setting strikes beyond that ±10% threshold adds another layer of statistical advantage.
The market is unpredictable, but stacking probabilities in your favor? That’s repeatable.
Let’s see how large of a trading range we can create using two different strategies (iron condor & short strangle) while still bringing in an ample amount of option premium.
The Trade Setup
Call Side
- Short March 7, 2025 $155 Call – Probability of success: 91.62%
- Long March 7, 2025 $160 Call – Defines risk
Put Side
- Short March 7, 2025 $104 Put – Probability of success: 85.79%
- Long March 7, 2025 $99 Put – Defines risk
Together, this forms an iron condor spanning a 51-point range, with Nvidia ideally landing between $104 and $155 post-earnings.
Risk-Reward Breakdown
- Premium Collected: $80 per iron condor
- Potential Return: 19.0%
- Margin Requirement: $420 per iron condor
- Break-even Points: $103.20 (lower) and $155.80 (upper)
To breach either short strike, Nvidia would need to move more than 22.6% to the upside ($155) or 18.1% to the downside ($104)—well beyond the expected range.
Iron Condor vs. Short Strangle: Managing Risk in Earnings Trades
While the iron condor limits risk, traders willing to stomach more exposure might look to a short strangle—stripping away the hedge by selling a naked short put and short call.
Example Short Strangle Trade:
- Sell March 7, 2025 $160 Call
- Sell March 7, 2025 $100 Put
- Credit Received: ~$1.60
This trade provides more premium, a higher probability of success (since less premium is sacrificed on hedging), and greater capital efficiency. But the cost? Unlimited risk if Nvidia explodes beyond expectations.
To breach the short strikes, Nvidia would need to rise 25.9% ($160 call) or drop 21.3% ($100 put)—moves less likely, but far from impossible given its history of earnings surprises.
Which Trade Is Right for You?
- Want defined risk? Stick to the iron condor. It caps losses and removes the emotional rollercoaster of an unchecked short position.
- Willing to take on more risk for greater reward? The short strangle offers a higher payout but demands disciplined risk management—especially in the event of an outsized move.
Trading earnings isn’t about predicting the future—it’s about structuring positions where the numbers work in your favor. Risk first, probabilities second, profits third.
And as always, when dealing with high volatility, the market doesn’t care about your confidence—it only cares about your risk management. Always, position-size accordingly.
The Option Premium: A No-Nonsense Approach to Options Trading
After 22 years in the financial publishing industry, I’ve seen too many options newsletters filled with hype, overpriced gimmicks, and empty promises. That’s why I created The Option Premium—a straightforward, high-quality options trading newsletter packed with education, actionable trades, weekly indicators, and multi-strategy portfolios that actually move the needle.
No spam. No sales pitches. Just one free email a week designed to help you trade with more precision, patience, and probability.
📩 Try it free and see the difference for yourself: The Option Premium
Probabilities over predictions,
— Andy Crowder
