Option Strategy
Buying 1-strike OTM weekly calls or puts the day after earnings in direction of a strong move. Example:
- Puts on AAPL today.
- Calls on FB tomorrow.
- How well does this work in general, e.g. for other stocks?
Call Out Your Potential Option Trade and Let's Discuss it
- Thread starter jeffalvinson
- Start date
- That was the only time I tried it. But I will look into it more next earnings.
- I consider it a "Mechanical/Follow the Money" type of trade.
Terrible strategy. Vol gets crushed not only the day after the report but usually continues to have spillover effects for the week after. There are ways to exploit earnings type of trades but I'm not going to post them. A little bit of hard work and you will find them.
So most likely he/she sold the calls?
Appreciate your feedback. I noticed that trend you mentioned.
You gave me something to work on. Thanks.
So far this trade seemed going OK for you. But as Maverick said in general Vol crushed after earning so may not work in general.
- That was the only time I tried it. But I will look into it more next earnings.
- I consider it a "Mechanical/Follow the Money" type of trade.
"Vol crush" is just a useless overused buzzword on ET, and it does not apply in this case at all. Put your thinking cap on and study the trade I made and figure out why Vol crush is a mute point.
Click here for answer
The trade was purely a momentum play, with the intention of buying OTM and selling ITM. Option greeks had no part in the trade - it's all about the underlying.
"Vol crush" is just a useless overused buzzword on ET, and it does not apply in this case at all. Put your thinking cap on and study the trade I made and figure out why Vol crush is a mute point.
Click here for answer
The trade was purely a momentum play, with the intention of buying OTM and selling ITM. Option greeks had no part in the trade - it's all about the underlying.
Then by proxy, the options had nothing to do with it either and you are posting on the wrong thread.
I said it looked like he bought the calls and sold the stock meaning he was really buying synthetic puts to get short on top of a strong rally in oil. Good trade if that is what he did.
The title of the thread is "Call Out Your Potential Option Trade and Let's Discuss it".
My option trade strategy is very similar to the OP's since they both involve a "Follow the Money" & "Mechanical" type of approach - so I wanted to share it for discussion. I even included a live trade from entry to exit as a demo.