Earnings & Events-Related Option Plays

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arizonadreamer

It seems that many out here are interested in short-term options plays. I have started this thread so that trades related to short-term events (i.e. earnings, FDA announcements, FED meetings, litigation, etc.) can be easy accessed rather than searching through 100s of other threads.

So post your ideas or questions here. Whatever your strategy is, buying, selling, spreads, straddles, strangles, butterflies etc., feel free to share.

I'll start it off. Yesterday, for AMZN earnings, I did a 1:2 ratio on the Dec 80 and Nov 80 puts. Since IV dropped and the underlying moved down, I was able to close the position at a profit.

Good luck to all.

AZD
 
BIDU and UTHR looks good with juicy IVs. Still studying as have not found best way to play it yet for me but certianly worth discussing.
 
Quote from optioncoach:

BIDU and UTHR looks good with juicy IVs. Still studying as have not found best way to play it yet for me but certianly worth discussing.
More...

I tend to do earnings on a lower-risk directional gamble rather than try and profit from either direction.

IE, I bought an AMZN SSF and an ATM put. They moved in tandem; if AMZN exploded up, my breakeven was the SSF cost + price of the put. Anything higher and it was profit. In this case, AMZN tanked, so the ATM put covered the losses with the SSF as it sank, and I was able to exit the position gracefully and for (IIRC) the price of commission. General advantage is that you're only paying option premium on one 'leg' of the synthetic position.

Of course, SSFs aren't available for all stocks and etfs, so YMMV - Your Mileage May Vary.

If you are conservative and don't want to do the Strangle/Straddle, you might consider a short butterfly.
 
Quote from optioncoach:

BIDU and UTHR looks good with juicy IVs. Still studying as have not found best way to play it yet for me but certianly worth discussing.
More...
Coach, I just checked BIDU chain and notice a very large difference in Nov call and put IV at low strikes, e.g. 263% on a 35 call and 159% on a 35 put (both on the Ask). To illustrate, to get the put IV up to the call IV level it should be offered at $2.40 instead of $0.30.

I know basic p/c parity does not hold for Am-style options, but is there really no limit to the discrepancies here before they can be exploited?
 
Quote from optioncoach:

BIDU and UTHR looks good with juicy IVs. Still studying as have not found best way to play it yet for me but certianly worth discussing.
More...

Do you wait until just before closing on the day of the EA? I did an IC on GOOG last week with about 2 hours to go. It then proceeded to move up. If I had waited until 15 minutes before the close I would have moved the strikes up 10 points and done better. I still made 2.50, but it could have been 7.50. Also could have save a lot of swearing and sweating.
 
Quote from rickf:

I tend to do earnings on a lower-risk directional gamble rather than try and profit from either direction.

IE, I bought an AMZN SSF and an ATM put. They moved in tandem; if AMZN exploded up, my breakeven was the SSF cost + price of the put. Anything higher and it was profit. In this case, AMZN tanked, so the ATM put covered the losses with the SSF as it sank, and I was able to exit the position gracefully and for (IIRC) the price of commission. General advantage is that you're only paying option premium on one 'leg' of the synthetic position.

Of course, SSFs aren't available for all stocks and etfs, so YMMV - Your Mileage May Vary.

If you are conservative and don't want to do the Strangle/Straddle, you might consider a short butterfly.
More...

What is SSF?
 
Quote from Eliot Hosewater:

Do you wait until just before closing on the day of the EA? I did an IC on GOOG last week with about 2 hours to go. It then proceeded to move up. If I had waited until 15 minutes before the close I would have moved the strikes up 10 points and done better. I still made 2.50, but it could have been 7.50. Also could have save a lot of swearing and sweating.
More...

I prefer it if EA is right before expiration to help with theta but not the case with BIDU and UTHR, although we have no idea when FDA or whatever will announce for UTHR. So a calendar cannot be looked at, at expiration. I have to use day steps in the analyzer and test differnet IV scenerios.
 
Quote from arizonadreamer:

FFIV is always good for "entertainment." Reports after market close today.

I am considering a play . . . will post if I do anything.

AZD
More...

Decided to pass on FFIV. I don't have a good "feel" for what they might do. In the past, selling OTM puts has worked out well due to the IV collapse, but something seems "off" with this decline today. I'm not going to force anything.

AZD
 
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