Earnings trades

Discussion in 'Options' started by IV_Trader, Jan 10, 2006.

  1. This thread is for NON DIRECTIONAL short term trades around earnings release dates , neutral long/short straddles/strangles , Calendars and Reverse Calendars.

    Examples :

    Short DNA (1/10 , ac) strangle
    Long CAI (1/18,na) combo
    Long HTCH (1/18 , ac) combo

    I will post the real # later , if conditions are still favorable
  2. bought HTCH Jan 30 straddle , 1.95$ (ratio 1:1)
    bought CAI Jan 60 straddle , 3$ (ratio 1:1)
  3. closed DNA short strangle for 1.50$ profit , out of CAI (report moved to 1/25)
  4. fader


    hi - great thread, i have been interested in the subject for a while but haven't gotten around to looking into this in any detail... - if i may ask a couple of questions - does implied volatility tend to rise in the period approaching earnings, and if yes, you believe that it still ends up underpriced? - also, what is your rationale for shorting a strangle vs buying a straddle, is this driven by the options prices you can execute at or do you short a strangle if you believe the impact of earnings will be limited, but still significant enough for you to make a profit? thanks in advance and all the best.
  5. thanks , fader

    short combo > when inflated IV and limited move after earnings
    long combo > undervalue IV and/or potential big (up or down) move after report.
    A lot of weight > calendar report date position to option's expiration.
  6. fader


    thanks for the comments, i look fwd to following the journal, best of luck with you trades.
  7. bought AVCT (1/19) Jan 30 combo ratio 10 puts (85c) to 17 calls (50)
  8. sold puts for 1.05 , sold calls for 80 c , average combo profit=52 cents.
    This was the faster IV spike/trade ever , AVCT posted report date yesterday after close and so many people lined up to buy low volx , unreal
  9. Both of these went up? So you sold in anticipation of them announcing an earnings' date and b/c IV was quiet? How did you know they would schedule earnings prior to expiry?

    Nice Trade IMO, sd
  10. yes , both are up big (without any change iin stock's price)
    Actually , its much higher now (1.10 for a call and 1.00 for a put) , I close to early , but one never knows...
    #10     Jan 13, 2006