I got a text this week from a friend who’s new to trading. It was a screenshot of his account, down 90%. The culprit? He bought a bunch of weekly, way out-of-the-money calls on a tech stock right before earnings. A pure lottery ticket. He was hoping for a 10-bagger and instead got a zero. It’s a story I’ve seen a thousand times. It reminds me why my entire approach to earnings is built on the opposite principle: don't guess the direction, sell the certainty of the volatility collapse.

Going into its earnings last week, Adobe (ADBE) was a classic setup. The market was nervous. My screens showed the 30-day implied volatility had spiked to an IV Rank of 92. That’s the 92nd percentile over the past year. In simple terms, options were outrageously expensive. This is music to a premium seller's ears. Fundamentally, Sarah Chen had a solid, neutral-to-bullish take on their AI integration, which gave me confidence the company wasn't about to fall off a cliff. But I wasn't betting on a surge, either. I was betting on that IV Rank getting crushed back to its mean of around 30-40.

This is the core of how to trade options on earnings for income. You're not a stock picker; you're a volatility seller. You're taking the other side of the lottery ticket buyers. My morning routine of scanning unusual options flow analysis today showed huge volume on both calls and puts—a sign of pure uncertainty. Perfect for an iron condor.

I decided to put on an iron condor, which is just selling a put spread and a call spread at the same time. It’s a defined-risk trade that profits if the stock stays within a specific range. I wanted to give myself plenty of room.

• Action: Sold the ADBE June 21st expiration Iron Condor.
• Call Spread: Sold the $500 strike, Bought the $510 strike.
• Put Spread: Sold the $420 strike, Bought the $410 strike.
• Total Credit: Collected $2.85 per share, or $285 per contract.

My breakeven points were $502.85 on the upside and $417.15 on the downside. At the time, ADBE was trading around $460. This structure gave me a massive $85 range for the stock to move in. My max profit was the $285 credit I took in, and my max loss was capped at $715. The probability of profit on this trade was sitting north of 75%. I'll take those odds over a 10% chance on a naked call any day.

Adobe reported. The numbers were good, guidance was solid, and the stock popped... to about $480. It was a big move, but it was nowhere near my short call strike of $500. The next morning, I woke up and checked the position. The IV had collapsed from over 90% to around 40%. My condor, which was worth $285 when I put it on, was now trading for about $0.60. I bought it back to close the position, locking in a profit of $225 per contract in less than 24 hours. No stress, no guessing.

The lesson here isn't about being right; it's about putting the odds in your favor. Time decay, or theta, is the only edge that works every single day, and an earnings report is like hitting fast-forward on that decay. This is a world away from something like the best covered call strategy, which requires you to own the stock. This is a pure volatility play. It's a strategy that works even in the crazy tech markets that someone like Luna Park follows closely. Volatility mean reversion is a powerful force.

I learned this the hard way years ago getting run over on a Netflix earnings report where I set my strikes too tight. I got greedy. Now, I give the position plenty of breathing room and focus on collecting a reasonable premium with a high probability of success. It's a repeatable process, not a one-time gamble. So, I have to ask: are you actively selling the insane volatility around earnings, or are you still buying the lottery tickets?