How might the earnings outcome affect short‑term trading strategies (e.g., options, volatility trades)?

Overview

Y‑mAbs Therapeutics (NASDAQ: YMAB) announced that it will release its Q2 2025 financial and operating results on Friday, August 8, 2025, before the market opens.

For short‑term traders this event is a classic “earnings‑driven volatility” catalyst. The market will already have priced a significant amount of uncertainty into the stock’s price and, especially for a commercial‑stage biotech, the implied volatility (IV) of YMAB options is typically elevated in the days leading up to the release.

Below is a step‑by‑step framework for thinking through short‑term trading ideas (options, volatility trades, and related risk‑management) that can be applied to this specific earnings event.

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1. What the market currently expects

Factor	What we know from the announcement	Typical market implication
Timing	Results will be posted before market open (likely 7:30‑8:00 a.m. ET).	The price will open based on the earnings release; there is little “after‑hours” window for a reaction.
Company profile	Commercial‑stage biotech; revenue depends heavily on the performance of its antibody pipeline (e.g., Tremelimumab, RUBI‑1, etc.).	Biotech stocks typically have high earnings‑related risk because a single trial, regulatory decision, or sales figure can move the stock 10‑30 % in a single day.
Current IV	In a typical earnings window for a Nasdaq biotech of this size, IV is 70–120 % (annualized) a week before earnings and drops 50‑80 % after. (Exact numbers can be retrieved from the options chain.)	The higher the IV, the more expensive “direction‑agnostic” strategies (e.g., straddles) become, but the larger the volatility crush post‑release.
Historical reaction	Y‑mAbs has historically shown large moves on earnings (e.g., ±20 % on prior quarters) with large gaps after the report.	Expect a big short‑term move (up or down) and a significant IV drop once the numbers are in.

Key take‑away: The market is “waiting for the news”. If you are comfortable with a high‑IV, short‑duration bet, earnings is the right moment; if you are volatility‑averse, you may want to avoid or hedge.

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2. How the earnings outcome can affect the price

2.1. Quantitative “what‑if” scenarios

Scenario	Typical price impact (≈)	Implied‑vol impact	Typical drivers
Strong beat (+10–20 % or more)	+15 % to +30 % intraday swing (possible gap up)	Sharp IV crush (IV down 40‑70 % from pre‑earnings level)	Higher‑than‑expected sales, favorable regulatory/clinical data, upbeat guidance.
Miss (‑10–15 % or more)	–12 % to –25 % swing (gap down)	Sharp IV crush (same magnitude)	Missed revenue, adverse trial data, weak guidance, regulatory setback.
Mixed (in‑line with expectations)	Small move (±3 %)	Partial IV crush (IV still falls, but less dramatically)	Results match analyst consensus; limited surprise.
Guidance surprise (even if results are “on‑target”)	Large directional move (guidance often drives the bigger swing).	Same as above.	Guideline revisions (e.g., Q3 outlook, new trial milestones).

Why does this matter?

- Direction‑biased traders (e.g., buying calls/puts) need to pick the likely scenario based on their own research (pipeline updates, analyst sentiment, insider buying, etc.).
- Direction‑agnostic traders (e.g., straddle, strangle) collect the premium if they correctly anticipate the magnitude of the move and can survive the IV crush after the announcement.

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3. Short‑Term Options Strategies

Below are commonly used structures for an earnings release, along with pros/cons for YMAB. The exact strikes/expirations should be calibrated to the current options chain (e.g., 30‑day expiry, 5–10 % out‑of‑the‑money (OTM) strikes).

3.1. Direction‑agnostic (Volatility) Plays

Strategy	Construction	Why it works for YMAB
Long Straddle	Buy ATM call + ATM put (same expiry, same strike).	Captures any large move; ideal when you expect a big price swing but are uncertain about direction.
Long Strangle	Buy OTM call + OTM put (same expiry, typically 5‑10 % OTM).	Cheaper than a straddle; still captures large moves. Works well when IV is high (cost still reasonable).
Ratio Call/Put (e.g., 2:1)	Buy 1 OTM call + sell 2 ITM (or lower‑strike) calls to create a “de‑risked” upside.	Useful if you lean bullish but want to reduce cost; risk limited by the sold leg.
Calendar Spread (Long front, short later)	Buy front‑month OTM call/put (higher IV) & sell same‑strike longer‑dated (lower IV) to capture IV decay after earnings.	Works when you expect a quick move and then a volatility crush—the long leg benefits from IV recovery after the short leg expires.

Key Parameters to Choose

• Expiration: Use one‑month (or 30‑day) options for a balance of liquidity and manageable time decay. A 2‑week or 3‑week expiry often gives the best trade‑off between IV (high) and time value (still meaningful after earnings).
• Strike selection:
  
  • Straddle: 100 % strike (ATM).
    
  • Strangle: 95 % and 105 % (or 90 %/110 % if you anticipate a >10 % move).
    
• Premium cost vs. expected move: If the straddle costs >$10 per share and you need a 20 % move (≈$2–3 price change on a $15 stock), the risk‑reward may be poor. Adjust strikes or consider a ratio to reduce cost.
• Greeks: High Gamma (rapid delta change) around earnings; expect rapid P/L swings as the price moves. Vega is high, so IV moves dominate early.

3.2. Direction‑biased Plays

Strategy	Construction	Use‑Case
Long Call (or Put)	Buy OTM call (or Put) 5‑10 % out‑of‑the‑money.	When you strongly believe the earnings will beat (call) or miss (put).
Bull Call Spread	Buy lower‑strike call, sell higher‑strike call (both OTM).	If you think the stock will rise but want to cap cost.
Bear Put Spread	Buy higher‑strike put, sell lower‑strike put.	Opposite direction.
Synthetic Long/Short (call + short stock)	Combine long call + short stock to create a synthetic long; can be hedged with put.	Advanced: using the stock’s price move to leverage options while limiting cash outlay.
Protective Put (if you hold shares)	Buy a put to protect a long position.	Defensive if you own YMAB and expect volatility.

When to favor directional trades:

- You have concrete information (e.g., a regulatory submission that is expected to be approved, a recent trial readout, or insider buying) that points strongly to a specific direction.

- You are comfortable risking the premium without hedging (i.e., you can afford to lose 100 % of the premium if the move is not enough).

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4. Volatility‑Focused Trades (Vol‑Trading)

4.1. Volatility Crush Play

1. Sell the high‑IV front‑month options (e.g., sell ATM straddle) and buy the same‑strike options in the next month (low‑IV, longer‑dated).
   
   • Mechanic: You are short volatility on the near‑term (the day of earnings) but long volatility on the later leg. If the move is less than the premium collected, you profit from the IV drop (the “vol crush”).
     
2. VIX / VIXY/ VIXM – Not directly relevant to a single stock, but the overall market VIX often spikes on earnings‑day. If you have a portfolio exposure, a short‑VIX position (e.g., VIX futures) can be considered if you think the market will stay calm.

4.2. Gamma‑Scalping (Advanced)

• Gamma spikes at the money at expiry. If you have an option‑market‑making setup (e.g., using a proprietary algorithm or a broker’s “Gamma scalping” tool) you can buy the ATM straddle, then delta‑hedge as the price moves. This captures Gamma‑profits at the expense of Theta (time decay). This is very sophisticated and is only appropriate if you have a solid hedging process and a tight bid‑ask spread.

4.3. Ratio/Butterfly for “Mean‑Reversion”

• If you expect a modest move (e.g., 2–4 % after the earnings), you can sell a tight butterfly around the current price (sell 1 ATM straddle, buy 2 OTM options). This collects premium while limiting the risk if the stock moves out of the butterfly range. This works when you anticipate a low‑vol environment even before the earnings release (e.g., when analysts have already priced the expected result into the price).

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5. Risk‑Management & Practical Considerations

Consideration	Practical Tips
Liquidity	Choose the next‑month (or 2‑month) expiration that still has > 500  contracts open interest and tight spreads (≤ $0.10 bid‑ask).
Position Sizing	For high‑IV biotech, limit each trade to ≤ 2 % of total portfolio value. The downside of a 100 % loss on the option premium can be large relative to the whole portfolio if not capped.
Max Loss	With long structures (straddle, strangle) max loss = total premium paid. With short structures (e.g., short straddle) potential loss is unlimited; use stops or hedge with protective puts.
Volatility Crush	Expect IV to drop 50‑80 % after the earnings release. If you are long volatility (long straddle), expect the time value to disappear quickly—plan to exit before the market opens (or at the opening bell) if the move is already realized.
Time of Trade	Enter the trade 2–3 days before earnings when IV is high but spreads are still reasonable. Avoid the “last‑minute” rush where spreads widen.
News / Insider Activity	Monitor any late‑breaking press releases (e.g., trial data posted after the earnings release) – these can create a second‑wave move and may make a post‑earnings trade viable (e.g., buying a call after a beat).
Tax & Account Type	If you have a tax‑advantaged account (e.g., Roth), be aware that short‑term options gains are short‑term capital gains. For an option‑based strategy that can swing +10 % in a day, consider the tax impact.
Regulatory / Clinical Risk	Biotech stocks are sensitive to clinical trial outcomes (phase II/III). Even a non‑financial data point (e.g., a safety signal) can swing the stock >20 % despite the earnings numbers. Treat the clinical narrative as equally important as the revenue numbers when forming a directional view.
Macro Market	If the overall market is extremely volatile (e.g., S&P 500 ±2 % on that day) the beta of YMAB may amplify the move. Use a beta‑adjusted position size if you are long/short the market.

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6. Suggested “Decision Tree” for the Trader

1. Check the Current Implied Volatility (IV) and Options Premiums

   • If IV > 80 % → The market already expects a big move; consider vol‑crush strategies (sell short‑term options, buy longer‑term).
     
   • If IV is moderate (50‑70 %) → You have room for long volatility (straddle/strangle) at reasonable cost.

2. Assess Information

   • Positive catalyst (e.g., strong trial data, new partnership)? → Lean bullish (call/ bull call spread) or long volatility (if you still want a hedge).
     
   • Negative catalyst (e.g., missed endpoint, regulatory hold) → Lean bearish (put/ bear put spread) or short volatility (sell a straddle).
     
   • Uncertain (mixed guidance, no new data) → Neutral (straddle/strangle) to capture any direction.

3. Select the Structure

   • Long vol: long straddle or strangle.
     
   • Vol crush: short straddle + long longer‑dated straddle, or sell front‑month options, buy later‑month options (horizontal spread).
     

4. Determine Position Size (e.g., 1 % of portfolio per long‑vol trade; 0.5 % for short‑vol because of unlimited risk).

5. Set Exit Rules

   • Profit Target: 30–50 % of premium paid (for long), or 30‑50 % of credit (for short).
     
   • Stop‑Loss: 25 % of the max possible loss for a short position (by buying a protective put or limiting the exposure).
     
   • Time‑based Exit: For a long straddle, consider exiting immediately after the market opens (or within the first 30 min) if the price moves beyond the breakeven width—this avoids the fast IV collapse after the first minute.

6. Post‑Release Action

   • If the stock moves significantly (exceeds breakeven) and IV has not yet collapsed, consider rolling the position to a later expiration (to keep upside exposure) or take profits.
     
   • If the move is small but IV remains high, consider selling a new straddle at the new price level (a “roll” to capture any second‑wave moves).

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7. Example (Illustrative Only – Not a Recommendation)

Trade	Strike	Expiration	Cost (per contract)	Break‑Even (up/down)	IV (pre‑earnings)
Long Straddle	ATM (≈ $15)	30‑day	$2.80 (call) + $2.80 (put) = $5.60 total	$15 ± $5.60 = $9.40 – $20.60	90 %
Short Straddle + Long 60‑day Straddle	Same ATM	Sell 30‑day straddle for $5.60, buy 60‑day straddle for $3.00	Net credit = $2.60	Break‑even similar, but net credit = $2.60. If the stock moves >$2.60, the long 60‑day protects you.
Bull Call Spread (if bullish)	Buy $15 call, sell $18 call	Net debit = $1.30	Upside = $3 (max) if >$18	Use if you have a positive earnings view.

Remember: The exact numbers will change as you get closer to the announcement.

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8. Bottom‑Line Takeaways

What you need to decide	What you do with that decision
How big of a move do you expect?**	Long volatility (straddle/strangle) if you expect >10 % move; vol‑crush (sell front‑month, buy longer) if you expect a move but want to capture premium.
Direction known?	Directional (calls/puts or spreads) if you have a strong bias; otherwise neutral (straddle/strangle).
Risk tolerance?	Limited‑loss structures (spreads) if you want to cap downside; unlimited‑risk strategies only if you have a high conviction and a tight stop‑loss.
Time horizon?	One‑day (exit before the market opens) for pure volatility capture; 1‑2 weeks if you expect a second‑wave after the release (e.g., delayed trial data).
Liquidity	Stick to the next‑month expiration with > 500 OI, tight bid‑ask.
Potential outcome	+: If a surprise, your long‑vol or directional play may explode. –: If the market already priced the surprise, IV crush can wipe out long‑vol premium; a short‑vol strategy can survive but may face unlimited loss if the move is bigger than your hedging.

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Final Recommendation (Non‑Advisory)

• If you have no strong directional conviction: Buy a 5‑10 % OTM strangle (or a modest‑strike straddle) on the 30‑day expiry, set a target of 40–50 % profit and a stop at 30 % of the premium paid. Exit as soon as the market opens if the price moves beyond breakeven (to avoid the vol crush).
• If you are bullish and have a specific catalyst (e.g., a trial read‑out you expect to be positive): Buy a bull call spread (ATM call + OTM call) or go long calls 5‑10 % OTM to leverage the upside while limiting cost.
• If you think the market is over‑paying for volatility: Sell the short‑term ATM straddle and buy the same‑strike straddle for a later expiration (a “vertical calendar” or “roll‑forward”) to capture the volatility crush while still retaining a long‑vol tail if the stock moves further after the release.

Always combine the options trade with hard stop‑losses and a position‑size limit; biotech earnings can be binary in outcome, and the IV swing can be extreme. Use the break‑even and IV‑crush calculations as your compass, and stay disciplined about exit timing.

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This analysis is for educational purposes and does not constitute investment advice.