Have you ever felt the rush of a stock about to make a big move? That’s exactly what’s brewing with DoorDash as it gears up for its second-quarter 2025 earnings release on August 6. Traders are buzzing, and the options market is practically vibrating with anticipation. With the stock already up nearly 50% this year, the question on everyone’s mind is: can it keep climbing, or is a pullback looming? Let’s dive into the strategies that could help you navigate this high-stakes moment.
Why DoorDash Earnings Are a Trader’s Goldmine
DoorDash, a titan in the local delivery game, has been on a tear, with shares soaring almost 140% over the past year. Trading at a jaw-dropping 9.4 times trailing revenue and a staggering 192 times adjusted EPS, this isn’t your average stock. It’s a growth juggernaut, but one that’s starting to show cracks. Analysts are projecting a robust $3.1 billion in revenue for Q2, a 20% year-over-year jump, alongside $1.10 in adjusted earnings per share. Sounds impressive, right? But here’s the kicker: the company’s growth is slowing in key areas, and competition is heating up.
I’ve always found that earnings season is like a high-stakes poker game. You’ve got to read the table, know your odds, and play your hand smart. For DoorDash, the options market is signaling an 8.5% post-earnings move, which is bigger than its historical average. That’s a lot of potential action—perfect for traders who know how to harness volatility. So, how do you play this without getting burned? Let’s break it down.
Understanding the DoorDash Setup
First, let’s talk numbers. DoorDash’s meteoric rise comes with a catch: its valuation is sky-high, and the market’s expectations are even higher. The company only recently turned profitable in 2024, posting a modest $0.79 per share in adjusted EPS for the full year. Now, analysts expect Q2 alone to deliver $1.10 per share. That’s a big ask for a company facing slowing food delivery growth (down to 13% year-over-year in Q1) and fierce competition from rivals.
Earnings are a make-or-break moment for high-growth stocks like DoorDash, where valuations leave little room for error.
– Market analyst
Here’s where it gets tricky. Even if DoorDash delivers solid results, the stock’s massive run-up could mean muted gains post-earnings. On the flip side, a miss could send shares tumbling. The options market’s 8.5% implied move suggests traders are bracing for something big—bigger than the 5.2% average move seen over the last four quarters. This gap creates opportunities for savvy traders to capitalize on inflated options premia.
Strategy 1: Selling Straddles for Premium
One way to play this is by selling straddles. This involves selling both a call and a put at the same strike price, betting that the stock won’t move as much as the market expects. It’s like betting the hype is overblown. If DoorDash’s stock stays within a tight range post-earnings, you pocket the premium. For instance, selling an August 29th expiration straddle could net you a juicy 3.7% of the stock price in just five weeks—equivalent to a 39% annualized return.
But here’s the rub: this strategy isn’t for the faint of heart. If DoorDash swings wildly, you’re on the hook. A big upward move could leave you short the stock at a high price, while a plunge could force you to buy at a loss. It’s a high-reward play, but the risk is real.
- Pros: High premium collection, ideal for range-bound stocks.
- Cons: Unlimited risk if the stock moves significantly.
- Best for: Experienced traders comfortable with volatility.
Strategy 2: The Strangle Swap Approach
Feeling cautious? The strangle swap might be your jam. This strategy involves selling a near-term strangle (like the August 225/285) and buying a longer-dated, further out-of-the-money strangle (say, November 220/290). The idea? You collect premium from the short strangle while capping your risk with the longer-dated one. It’s like buying insurance for your bet.
Here’s why I like this approach: it limits your downside while still letting you cash in on the rich premiums driven by earnings hype. The November strangle, with over two months until expiration, gives you wiggle room if the stock makes a surprise move. It’s not perfect—estimating the future value of the November strangle is tricky—but it’s a solid middle ground for traders who want action without going all-in.
| Strategy | Risk Level | Potential Reward |
| Selling Straddle | High | 3.7% in 5 weeks |
| Strangle Swap | Medium | Similar to straddle, capped risk |
Reading the Market’s Mood
Before you jump in, let’s talk about the bigger picture. DoorDash operates in a competitive space, and growth moderation is a real concern. Q1 showed food delivery growth slowing, and while projections for 2025 are rosy (think 25% CAGR), other companies in different sectors—like certain tech giants—are growing faster at lower multiples. This makes DoorDash a tough sell for value-focused investors, but a playground for options traders.
Options traders thrive on volatility, and DoorDash’s setup screams opportunity. The 8.5% implied move is a signal that the market’s expecting fireworks. But is it justified? Past earnings suggest a smaller move, which could mean overpriced options—a classic setup for premium sellers.
Volatility is a trader’s best friend, but only if you know how to harness it.
– Options strategist
Risk Management: Don’t Get Caught Off Guard
Trading earnings is like walking a tightrope. One misstep, and you’re in trouble. Whether you’re selling straddles or trying a strangle swap, risk management is non-negotiable. Here’s how to stay safe:
- Size your position wisely: Never bet the farm on a single trade.
- Know your exit: Set clear profit and loss targets before earnings hit.
- Stay liquid: Ensure you have enough capital to cover margin calls.
In my experience, the biggest mistake traders make is underestimating how fast things can go south. A sudden 10% swing in DoorDash could wipe out your premium and then some. Always have a plan B.
Why Timing Matters
Earnings trades aren’t just about picking the right strategy—they’re about timing. DoorDash’s August 6 report is just days away, so you’ll need to move fast. Options prices are already inflated, which is great for sellers but tricky for buyers. If you’re eyeing a strangle swap, consider setting it up early to lock in premiums before the market gets too wild.
Another thing to watch? The broader market. If tech stocks are shaky leading into earnings, DoorDash could feel the heat, even with strong results. Keep an eye on market sentiment to gauge the stock’s likely direction.
Alternatives to Options: A Safer Play?
Not everyone’s cut out for options trading, and that’s okay. If the idea of unlimited risk makes you queasy, consider a simpler approach: trading the stock itself. Buying shares before earnings could work if you believe in DoorDash’s long-term story. Alternatively, you could wait for the post-earnings dust to settle and buy on a dip if the market overreacts.
Personally, I think options offer more bang for your buck in this scenario, but there’s something to be said for keeping it simple. A stock trade avoids the complexities of theta decay and implied volatility, which can trip up even seasoned traders.
Final Thoughts: Seize the Opportunity
DoorDash’s earnings are a chance to flex your trading skills. With the options market pricing in a big move, strategies like selling straddles or strangle swaps can help you cash in on the hype—without betting the house. Just remember: high reward comes with high risk. Stay sharp, manage your exposure, and don’t get caught chasing the stock’s next big leap.
Perhaps the most exciting part of trading earnings is the unpredictability. Will DoorDash defy gravity again, or is a reality check coming? Whatever happens, the options market is your playground. Use these strategies, keep your cool, and you might just walk away with a win.
Trading Checklist: - Analyze implied volatility - Set clear risk limits - Monitor market sentiment - Plan your exit strategy
Ready to dive in? The clock’s ticking, and DoorDash’s earnings are just around the corner. Make your move, but trade smart.
