IV trading on earnings

Analysts are never wrong. It's usually the fault of the liberal media (see 07-08 market decline)

 

hahahah wow, way to kill your account. this isn't rocket science, you use a short straddle IF you wish to attempt this at all


never go into earnings directionally.



high probability for IV crush if you sell straddle the day before earnings release

high probability of gains if you buy straddle a few days before earnings release

 

Well, this second strategy (to simply profit from long-term directionality) was my original one, because Pfizer looks poised to beat its earning estimates, like it did for nearly 3 years.

And it has widened its planned share repurchase program to $2B, which will drive up the price somewhat.

 

That seems much better than taking on an unlimited risk.

 

Okay. Without any sense for how much you think the stock will move, you are better off buying stock instead of calls.

 

Or LEAPs.

 

Bid offer in delta terms is a lot. Additionally you are taking on a lot of other risks.

 

Yeah, you're right. I'm just going to stick with a long straddle to trade earnings.

 

Again. If you are bullish, why are you buying a straddle? If you don't have a view on how much the stock will move why are you buying the straddle?

 

I haven't bought anything yet...

I'm just going to go with the calls.