Its a fairly well documented phenomenon that option volatility increases going into earnings then immediately deflates after the fact. An at the money "straddl

Its a fairly well documented phenomenon that option volatility increases going into earnings then immediately deflates after the fact. An at the money "straddle option" is essentially purely a volatility play, but the problem is that once the stock moves, the "straddle option" accumulates various other risk factors that are harder to manage. This is also why you can't just sell the position knowing that the volatility will go down after earnings, because the change in the risk characteristics other than volatility may be sufficiently costly so as to offset the gains from the decrease in volatility with a short straddle position. This particular play is fairly common though and many option traders who feel they have insight into the magnitude of the future move relative to its pre-earnings pricing will make plays on it (largely based on historical evidence or earnings predictions).