$Adobe(ADBE.US) earnings are scheduled for tomorrow after the market closes, with the options market pricing in an implied volatility of ±8.7%.

Two background numbers: Out of the past eight earnings reports, the actual volatility exceeded the implied volatility five times. Last quarter, the implied volatility was 6.8%, but the stock actually fell by 8.7%. The quarter before that, the implied volatility was 7.7%, but the stock actually rose by 8.6%. Sellers of volatility have been taking consecutive losses on this stock, and the current 8.7% is already an elevated quote.

The stock has lost a quarter of its value year-to-date, and it closed slightly lower last night around $238. The market has largely priced in the negative impact of AI eroding creative software. With expectations set so low—consensus EPS at 5.82 and consensus revenue at $6.46 billion—the bar for exceeding expectations isn't actually that high.

I'm not trying to guess the direction because volatility itself is more worth trading than direction—the odds for a long straddle aren't bad, given the implied 8.7% volatility and the history of five previous overshoots.