Earning day out of money options trading strategy
- Thread starter etherboy
- Start date
Sorry, you're right I should have stats handy on backing that up if I am going to post it and I dont. My apologies I try to keep it real. I believe there have been several studies on both straddles and strangles for earnings plays and if I recall correctly they concluded that the buy side over time ( mulitple quarters ) was a loser by a long shot. I will look for the "facts" but you'll have to forgive me if I dont have em handy tongiht, fair enough?
From a personal stand point if I had to choose between being long or short the straddle into earnings I have been known as a short gamma player most of the time and I'd rather sell it and trade aruond it if I have to.
From a personal stand point if I had to choose between being long or short the straddle into earnings I have been known as a short gamma player most of the time and I'd rather sell it and trade aruond it if I have to.
spindr0, you are right! Amazon $65 put cost $2.43 & $85 call cost $1.85 at yesterday close. They are pumped before earning.
No one trade at 0.75 & the other trade at 0.55!
So the combo shrink to (0.75+0.55)/(1.85+2.43) = 1.3/4.28 = 30%
If I trade this, I would have lost 70%!
It's very dangerous playing the earning.
No one trade at 0.75 & the other trade at 0.55!
So the combo shrink to (0.75+0.55)/(1.85+2.43) = 1.3/4.28 = 30%
If I trade this, I would have lost 70%!
It's very dangerous playing the earning.
Glad you avoided the loss! As in my above comments, I told you that Spindr0 is an expert (he was too humble to even accept it!). An expert in this forum is the guy who can help you make money or avoid lose money. Spin just showed it!
If I were I would send him a nice thank you note.
If I were I would send him a nice thank you note.
Quote from forex-forex:
I bought 200 contracts VMW Feb 2008 70.00 puts yesterday. When I went to close the position I found out that I was using my demo account.
This is a true story.
man how is that possible? dont they all have the big "DEMO" text blasted all over the screen? sorry for ya loss if it's true.
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I use the below strategy for earning play that's expected to be a mover. Provided this falls into the category of many small losss and 1 big win.
1) Earning report must be very close to current option expiration date, closer the better, 1 day is perfect.
2) Wait throughout the day until the underlying is as close to a strike price(any) as possible. Also the put/call at that strike needs to be reasonably priced.
3) Add up the call + put of the strike, if you still think the underlying will move greater than the sum after earning. Buy both put/call.
4) Right after earning, sell the losing side usually you can salvage a good portion of it. Then let the winning side run until you close based on your normal exit strategy. If the earning is soso and stock is stagnant, i would take a loss and sell both sides.
Dunno the fancy name or any technical option speaks you guys use, but i have done ok doing this if you pick the right stock/timing/strike. As most losses are pretty limited if done correctly.