Dron
Moderator
My Options Edge – Earnings Options Strategies
Earnings events present excellent trading opportunities. But don't get fooled by high IV and volatility crushed after the announcement…
Here you will learn two proven strategies that I am trading. You won't find here any obvious strategies like selling Iron Condors or Strangles. Instead, prepare to be surprised by a unique approach. Join us to learn these winning strategies and profit from earnings events.
For several years, I diligently attempted to capitalize on earnings through options trading. It seemed like an easy endeavor, given the predictable nature of the events: the implied volatility (IV) of options tended to be high prior to the earnings announcement, only to plummet afterward. It appeared that there had to be a way to leverage this event to profit from. However, despite some years of trials, involving the sale of Iron Condors or other selling IV strategies and analysis of the expected stock movement (either by assessing the price of the At-The-Money (ATM) Straddle or the Market Makers Move), I struggled to discover a consistent approach to exploit these occurrences.
There were occasions when I achieved significant wins, particularly when the stock exhibited minimal movement following the event. However, there were also instances where I experienced substantial losses due to wild swings in the stock price, occurring in either direction. During the long testing phase, I was unable to identify a robust strategy that could be incorporated into my option strategies arsenal, one that would deliver consistent gains (as many of you may already know, I prefer slow, steady, and consistent growth).
Recently, a shift in my thinking prompted me to explore a different perspective on trading earnings events that could support my trading profile (trade these events in a safer manner). As a result, I started testing a new approach, which ultimately proved to be a game-changer. The key to its success lay in leveraging the IV to my advantage while implementing a lower-risk and non-directional strategies. This shift greatly improved results delivering consistency!
The strategy supporting document describes the approach, highlighting how we can use the rising IV to tilt the odds in our favor. By understanding the dynamics of implied volatility and incorporating it into our trading decisions, we can navigate earnings events with reduced risk and increased consistency.
The strategies outlined focus on capitalizing on the pre-earnings IV build-up and are non-directional, like most of my other options strategies. These will remove the stress of the post-earnings IV crush delivering much better results. You will be surprised how easy these strategies are to trade and how thinking against the herd has greatly improved outcomes!
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