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Publicly-traded companies report their earnings results each quarter, and the option markets price in a potential jump in the stock price due to the release of the earnings news. The earnings conference call can also cause the stock price to move significantly if the company reports any unexpected news about the company’s operations.
Earnings announcements can provide great options trading opportunities with virtually instantaneous results, as a big movement in the stock price overnight can lead to huge gains when buying options through earnings.
Conversely, a non-movement in the stock price can lead to huge options trading profits when selling options through earnings, as the short-term volatility priced into the near-term options will get sucked out of the options after the earnings report passes.
In either case, there are opportunities for options-selling and option-buying opportunities through earnings.
In this video, I share specific information related to trading options through earnings announcements, including:
1) How to analyze the expected earnings move of a stock by looking at the options
2) A useful tool/website I use to analyze the historical earnings movements of virtually any stock you’d like to trade for earnings
3) My favorite options strategies to use for trading earnings for two different stock movement characteristics (big movers and inside movers)
4) Backtests and visualizations of earnings trades using the OptionNET Explorer software
There’s a ton of information in this video and I hope you can find some of it helpful in regards to your own trading.
But be warned, trading earnings is essentially gambling because we are making trades based on unknown information that can send the stock price soaring or tumbling, or nothing could happen at all. Depending on the options strategy implemented, the stock price outcome could lead to big profits/losses overnight.
=== LINKS / RESOURCES ===
OptionNET Explorer Trade Analysis Software:
Buy a Trial of OptionNET Explorer (w/ Discount):
OptionSlam Earnings Analysis Website:
=== RECOMMENDED VIDEOS ===
Stock Options Trading 101:
Iron Condors Explained:
Implied Volatility Explained:
Why Early Exercise/Assignment is Rare:
Options Trading For Beginners (PLAYLIST):
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