Volatility crush. normally the week of an earnings report or catalyst event, that stock's options will be juiced with volatility since there's a lot of uncertaintity and speculation. After the news comes out, volatility will drop. So if I bought a call expiring three days after the earnings report, if the stock doesn't rip far enough, my call could actually lose money because of that decrease in volatility.
With NFLX this week's expiration, next weeks and February's had more volatility in them than March and Aprils so if I bought an out of the money call in January or feb, I probably wouldn't have seen that $18 gain that the March call experienced. Would've been more muted and potentially even a loser since I'm buying an inflated time bomb.
The way KOTM plays earnings, they buy the weekly expiration and they create a spread to offset the volatility crush and time decay. So like for instance, yesterday in SBUX they put on an 83.50-84.50 call spread expiring today for.28 per 1 lot. Max risk 28 bucks for every contract bought, max gain 72 bucks per contract bought. So you cap your proceeds somewhat but you have less to worry about and could just focus on the direction the stock is moving.
What they do is get the historical movement of a stock after its report, get the implied move (take the at the money straddle and add/subtract it to the stock's current price to get your upside and downside targets), take a look at the chart, and develop a plan with the best risk reward set up for where the stock could potentially go. It's not a perfect plan, but it works well when you trade a lot of plays a week since the risk-reward is in your favor usually. (Risking 30 bucks to make 70 or risking 30 to make 300 on a $3 wide butterfly, etc)
They rarely buy a naked option before a report since they don't wanna deal with vol crush and time decay and they want to be out of the option after the event. But that NFLX idea I just had that hunch since point of controls are usually magnets once you break into value areas.
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