|
|
Don Kaufman here. |
Today we're talking about one of my favorite topics: Earnings Flips. |
Why? |
Because these are the trades where you can see some serious action, serious gains, and some instant gratification. |
Case in point: Today, I closed out two overnight earnings flip winners—a 200% gain in UnitedHealthcare (UNH) and a 225% gain in Taiwan Semiconductor (TSM). Yeah, you read that right. |
These weren't trades I sat on for weeks, sweating it out. They were in and out overnight, just the way I like it. |
Now, if this doesn't get you fired up for earnings season, I don't know what will. |
So grab your favorite drink—heck, grab two—and let's break down what earnings flips are, why they work, and how you can start trading them like a pro. |
What the Heck Is an Earnings Flip? |
An earnings flip is my bread and butter during earnings season. |
It's all about taking advantage of volatility crush—that beautiful moment when implied volatility (IV) collapses after an earnings announcement. |
Here's the deal: Before earnings, stocks get crazy, IV spikes, and everyone's expecting fireworks. But once the earnings report hits, the fireworks are over, and the air gets let out of the volatility balloon. That's where we step in to profit. |
And no, don't confuse this with gambling. We're not buying lotto tickets here. Earnings flips involve defined-risk trades that are built to capitalize on volatility dynamics. |
Think of it as setting up a butterfly spread or an in-out spread, letting the IV crush do its thing, and walking away with a tidy profit. |
Why Earnings Flips Work (and Why Most Traders Get It Wrong) |
Here's why earnings flips work so well: |
Volatility Crush: Before earnings, IV is through the roof. After earnings, it collapses, and that's where we profit. Defined Risk: We structure trades like butterflies and debit spreads, so we know exactly how much we're risking from the get-go. Quick Turnaround: These trades happen fast. You're in, you're out, and you're moving on to the next opportunity.
|
Why do most traders screw this up? Because they either: |
Go all-in on naked calls or puts, which is basically a gamble. Ignore IV altogether and try to chase the move after the earnings report is out.
|
Don't be that guy. We're not here to guess whether Tesla's gonna moon or crash—we're here to trade what the numbers give us. |
Today's Trades: UNH and TSM |
Let me give you a real-world example from just this morning. These two trades show exactly why I love earnings flips. |
1. UnitedHealthcare (UNH) |
The Setup: A bearish butterfly spread centered around $520. Why bearish? Because UNH is a bloated healthcare stock, and I figured it was due for a drop after earnings. Plus, IV was sky-high, making it a perfect candidate for a volatility crush. The Result: After earnings, UNH dropped like a rock—down $17 (it actually closed much lower, but that's all I needed). My butterfly hit the dance floor perfectly, and I walked away with a 200% gain.
|
|
|
|
2. Taiwan Semiconductor (TSM) |
The Setup: Another butterfly spread, this time targeting a slightly bullish move. TSM had strong fundamentals and a history of predictable post-earnings moves. Again, IV was pumped up, so the strategy was to profit from the IV crush. The Result: TSM didn't just move—it nailed the middle of my butterfly. Closed the trade for a 225% gain. That's what I call a layup.
|
|
|
|
These were overnight trades, people. In. Out. Done. |
If you're not doing these during earnings season, you're leaving money on the table. |
How to Set Up an Earnings Flip Like a Pro |
Let's talk about how you can start trading earnings flips like these. |
1. Pick the Right Stock |
Not every stock is a good candidate. Look for: |
High implied volatility (IV rank of 50+ is ideal). Liquid options (no wide bid-ask spreads, please). Big names with predictable moves (think SPX, Tesla, Nvidia, UnitedHealthcare, etc.).
|
2. Choose the Strategy |
The two strategies I use most for earnings flips are: |
Butterfly Spread: Great for targeting a specific price range after earnings. It's cheap, defined-risk, and offers a huge potential payoff. In-Out Spread: A simple debit spread for directional trades. Perfect if you have a strong idea of where the stock's headed post-earnings.
|
3. Time It Right |
Timing is everything. You want to put the trade on 1-2 days before the earnings announcement, when IV is at its juiciest. Wait too long, and you'll miss the sweet spot. |
4. Manage the Trade |
Once the earnings report hits, watch for the move and IV crush. If the trade's up 50%, 100%, or more, take the money and run. Don't get greedy. |
How Earnings Flips Pay Off |
Earnings flips aren't just about making money—they're about making money fast. Here's why they're so powerful: |
Regular Opportunities: Earnings season happens four times a year, like clockwork. Defined Risk: You know exactly what you're risking before you enter the trade. Big Payoffs: With the right setup, it's not uncommon to see 100%, 200%, or even 300% returns.
|
Look, not every trade is gonna be a winner. I'm the first to admit that. But with defined risk and a sound strategy, you'll live to trade another day. |
Final Thoughts |
Earnings flips are the bread and butter of my trading during earnings season. |
They're fast, fun, and—if done right—ridiculously profitable. Just look at today's trades: 200% in UnitedHealthcare and 225% in Taiwan Semiconductor. That's what this strategy is all about. |
If you're tired of sitting on the sidelines or blowing up your account guessing on earnings, it's time to jump in. And hey, if you're new to this, don't worry. |
Join me in the service, and I'll walk you through it step by step. |
As always, work 'em if you got 'em—and I'll see you on the dance floor. |
To your success, |
Don Kaufman |
|
|
Tidak ada komentar:
Posting Komentar