[EPS] Backtesting IV crush at different expiration dates

Discussion in 'Options' started by williamblake72, May 13, 2023.

  1. @switch985, I guess you mean the IV change after EarningsReport, right?
    If yes, then I can offer you this: I'm a programmer and I can do this for 2 tickers of your choice,
    for all its ExpirationDates for upcoming (ie. future) EarningsReport days.
    Let me know the tickers you are interested in.
    Of course this is a slow-motion method as one would wait for the next ER...

    As was already said by others, best is to buy the historic option data and find a programmer who can do it for you.

    Here are some interesting links about this topic:
    https://optionstradingiq.com/iv-crush-after-earnings/
    https://bullishbears.com/iv-crush/

    IV_crush_after_ER.png
     
    Last edited: May 14, 2023
    #11     May 14, 2023
    vanzandt likes this.
  2. taowave

    taowave

    There is a trial,they have Earnings reports/Vol and Matt the owner is a great guy..Dont tell him I said that :)

     
    #12     May 14, 2023
    Matt_ORATS likes this.
  3. ZBZB

    ZBZB

    use www.upwork.com or www.fiverr.com to find a programmer.
     
    #13     May 14, 2023
  4. Zwaen

    Zwaen

    I believe orats also sells data. I think an important point to decide on before you are going to test is how many samples and what kind of metrics will satisfy your trust, otherwise you call fell in the trap of the forever-backtester.

    I personnaly build my own 'backtest' strategy tool. Off course depending on what you want to do, but you basically need only programming skills for filtering the data. Further analysis can be done in excel. I think for this filtering gpt 3 can be of sufficient help nowadays (certainly simple filtering scripts in python)
     
    #14     May 14, 2023
  5. Zwaen

    Zwaen

    Thanks for the link, but I don't need it. Quite handy with python and R
     
    #15     May 14, 2023
    taowave likes this.
  6. ZBZB

    ZBZB

    meant to reply to OP.
     
    #16     May 14, 2023
  7. Matt_ORATS

    Matt_ORATS Sponsor

    If you can use Excel you can put the data together. You would identify stocks that would have less loss due to vega in the longer term option and less movement from the strikes.
    In our backtester, you can use Symbol, Entry Date, Exit Date to control the times for the test.

    This is a complex test:

    "measuring how much is IV ATM 7-30 days crush the day after EPS vs how much is IV ATM 30-60 days or IV ATM 60-90 days crush. Backtesting this for let's say 10-20 years.
    In this way it would be possible to recognize stocks which statistically have short term IV crush much more heavy than long term and use this information to trade EPS with calendar spreads (evaluating actual vegas)."
    You need to evaluate IVs before earnings, after earnings, calculate vegas (our use our actual vegas). We do offer consultants that can do this test but it would be time consuming (expensive).
     
    #17     May 15, 2023
  8. Thanks guys, I think to have found an answer with the site called Market Chamaleon, which hs no perfect data to answer to my question, but it enables both to evaluate historical pos/neg movements before and after earnings as well as evaluate for the last 12 earnings release what was the IV crush for IV 30 days, 60 days, 90 days, 120 days.
    I used these information to paper trade the earnings of last 4 weeks, and with only calendar/diagonal strategies i had a +30% ROI (+3k profit on 10k account).

    By the way I found orats a very interesting site since it has a option backtester. I think I can give it a try (not for earnings trading but other strategies probably..)
     
    Last edited: Jun 17, 2023
    #18     Jun 17, 2023
    cesfx likes this.