New traders often buy far out-of-the-money (OTM) options because they’re risking a relatively small amount for a chance at unlimited gains, assuming the underlying instrument jumps or plummets unexpectedly. But these options are cheap for a reason: OTM options rarely gain much because of their small delta; the underlying must move dramatically in the right direction to overcome time decay.

However, another strategy offers a similar reward-risk scenario and improves the odds of success: entering a calendar spread (short option + long same-strike option expiring later) on a stock just before quarterly earnings are announced. Although these positions are technically "time" spreads, implied volatility (IV) plays a larger role than time decay.