The Earnings Trading Secret I've Been Keeping |
(Until Now) |
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While stocks trade sideways about 75% of the time, they often experience extraordinary volatility after quarterly earnings releases. |
Many traders view earnings as a gamble, but with the right approach, it can be a lucrative opportunity. |
In this post, we'll explore how to analyze options ahead of an earnings event, using Delta Airlines (DAL) as our example, which is set to report Thursday morning. |
Understanding Stock Movement and Options Pricing |
On an average day, DAL trades within a $1.15 range (its 14-day Average-True-Range). |
At $46.87 per share, this represents about a 2.5% move. |
However, for the upcoming earnings report, the options market implies a 6.2% move on Thursday - more than double the typical movement. |
Calculating The Expected Move |
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The price of the straddle is around $2.87. Divide the straddle price by the strike price: $2.87/$47 ≈ 6.1% The slight difference between 6.1% and 6.2% is due to the current stock pricing being under $47
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Implied Volatility and Earnings |
Implied volatility on the $47 weekly options is about 81%. For comparison, the 31-day $47 strike options have an IV of 38.5% This difference illustrates how inflated IV becomes during earnings events.
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Why Implied Volatility Matters: |
After the earnings announcement, IV typically drops sharply. This "volatility crush" can significantly impact options prices, even if the stock moves in your predicted direction. |
For example, you might buy a call option, see the stock price rise, but still lose money on your option due to the IV decrease. |
The Pitfalls of Simple Options Strategies |
Buying calls or puts outright before earnings is risky because: |
The stock needs to move enough to overcome the IV crush It's an all-or-nothing bet with inconsistent results.
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A Game-Changing Approach to Earnings Options Trading |
What if I told you there's a way to trade earnings that could potentially: |
• Minimize the impact of IV crush |
• Offer significant upside potential |
• Limit your risk exposure |
• Provide consistent results across various market conditions |
Sounds too good to be true? |
I thought so too, until I discovered these lesser-known strategies. |
But here's the thing: These aren't your typical "buy calls" or "sell puts" approaches. They're advanced techniques that require a bit of explanation and live demonstration to truly grasp their power. |
That's why I'm hosting an exclusive live Mini-Mastermind: "Crush Events." |
During this session, I'll unveil: |
• The exact setups I use to potentially profit from earnings volatility |
• How to structure trades that can thrive regardless of market direction |
• A unique approach that could turn earnings uncertainty into your advantage |
Warning: This isn't your average "get rich quick" webinar. I'll be diving deep into real, actionable strategies that have the potential to transform your earnings season trading. |
Ready to take your options trading to the next level? |
Join me this Thursday at 12 PM ET. |
Spots are limited, and registration is absolutely free. Don't miss this opportunity to learn strategies that could revolutionize your approach to earnings season. |
Click Here to Secure Your Spot |
Remember, in trading, knowledge isn't just power—it's profit potential. See you Thursday! |
To your success, |
Don Kaufman |
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