How to Trade Options on Earnings – DASH Case Study

February 14, 2025
/ By Scott Redler

At the end of last year, I named DoorDash (DASH) one of my top picks for 2025.

In my 2025 Market Outlook, I said the stock could hit the $225 to $240 area — which I still think is doable. But today I want to show you how Power Plays Options (my new options alert newsletter) navigated the company's Q4 earnings report on February 11.

We'll go over:

Why I used a call spread instead of straight calls
Why sacrificing some reward led to a bigger gain
How you can get my next options idea

For reference, here's my take on DASH from the Market Outlook Report:

(click to enlarge)

The DoorDash situation was tricky for several reasons.

I liked the technical setup and the stock's leadership status. So I wanted to be long via call options.

But it wasn't that simple.

The stock had already gone up 16% in 2025 after a 70% run last year.

And the options were expensive.

The market was pricing in an 8.9% move even though the stock tended to move about 6.5% after earnings.

So I decided to use a February 21 $202.50 X $215 call spread. (meaning long the $202.50's, and short the $215's)

The spread was at $3.05 when we sent the alert out, while the straight February $202.50 calls were at $5.60.

Why this particular call spread position?

Because while a call spread capped my upside potential, it lowered the cost of the position, offsetting the expensive nature of the calls.

So if DoorDash went down or sideways after earnings, I'd lose much less than if I'd taken straight calls.

And yes, despite what you've heard on TikTok… real traders lose money sometimes.

In any case, I didn't see DoorDash getting much above $215 in even the best-case scenario.

I used a February 21 expiration to give me a little extra time in the position. This way, if the stock didn't go straight up, I'd have more room to let it rebound.

And that's exactly what happened.

DoorDash stock got hit on Wednesday after earnings… and then rose like a beast on Thursday before extending Friday as traders refocused on the long-term growth story.

And here's how the entire idea has gone so far in Power Plays Options. Note, this is a chart of the actual call spread — not DASH stock:

We added the spread at $3.05 on Tuesday, took off half on the open today at $4.32. And as of Friday 2/14 at 12:45 pm ET, we are letting the second half ride with the spread over $7.40 — a 100%+ move.

(note: there is a chance Power Plays Options will close out the remainder by the time you read this)

Over the same time span, the straight $202.50 calls went from $5.60 to $8.80, up 57%. That's a nice gain — but it's actually a smaller percentage increase than the $202.50 X $215 call spread we used in Power Plays Options.

The straight calls have a smaller gain because they were so much more expensive in the first place.

So by sacrificing some potential return, I actually increased my reward.

Now, not every idea works out like this — but it's awesome when they do!