Buying options ahead of an earnings report is a trap for small traders, even when the stock moves the right way.

• Option prices get expensive before earnings because everyone knows the date months in advance.
• Market makers raise the price to account for the big swings up and down earnings usually bring.
• Once the report is out, that extra price premium collapses — good news or bad news.
• The collapse can wipe out the gain from a stock that moved in your favor, leaving you with a loss.

Outlook: Traders holding options into the next round of earnings should expect the same squeeze, so the stock has to move far more than the headline beat to pay off.