Either way, long options are going to get killed from the vol crush. Need a gigantic move for them to work out. If you're going to trade directionally into earnings, why not buy a vertical instead of straight option?
Verticals are not the solution for all, no free lunch in earnings play. They limit your reward, which is one of the attractions of options into earnings.
Who said anything about a free lunch? And who really thinks they're going to get that 'unlimited reward"? As far as I know, no stock has gone to infinity yet. My point is that if you're going to use the options, through earnings and an obvious vol crush, why go with a strategy that sets you up for failure? Put the same dollar amount at risk in the trade (vertical versus straight option), but at least protect yourself from the vol crush you know you're going to get.
I understand your point of view, it's valid; but there are some that just go after huge runs, and in these cases, verticals are not adequate, depends on the trader's style, but once gain, your point duly noted.
I understand the desire for the home run trade. But looking at the Aug 75 puts as an example, trading for around $4 on the day before the release. These options lose about $3.85 to the vol crush, and need about $7 of stock movement to overcome that loss and THEN begin to profit. So if you're looking for a big move, keep in mind that the stock needs a minimum of a 9% move (about $7) just for this put to break even. A $12 move (15%) is needed to gain a 100% profit. Conversely, the 75/70 put spread generates a 100% profit in about an $8 move (10%). Both trades reach 200% profit with about a $15-16 drop, which is about 19%. Only AFTER this 19% movement will the put start to profit more than the spread. The spread also protects against losses better due to the hedged vega.
Bought 10 contracts Aug,17 2013 GMCR 80.00 calls, filled @ $0.98 http://finance.yahoo.com/q?s=GMCR130817C00080000
Please forgive my short-term memory loss, was GMCR trading down in After Hours yesterday or Wed at $66? Awesome Trade, good call on GMCR!