Top Earnings Options Plays for the Week (10/18 – 10/22)

top-earnings-options-plays-october-18-2021

Top Earnings Options Plays for the Week (10/18 – 10/22)

The Week Ahead

Here are 10 companies that I think could offer some interesting opportunities next week.

Below you will find the implied volatility (IV), IV rank, IV percentile, average past price movements around earnings, expected move (implied move) and a few other key items to help you with any potential trades.

I use the following list as a guide for any potential earnings season trades. If you have any questions on the information provided below don’t hesitate to email me or ask in the comment section below. And don’t forget to sign up for my Free Weekly Newsletter for weekly education, research and trade ideas.

top-earnings-options-plays-week-october-18-2021

Here are a few other top earnings options plays for next week (10/18 to 10/22).
top-earnings-options-plays-october-18-2021

Courtesy of Slope of Hope

Due to the uncertainty around earnings announcements, both speculators and hedgers create a huge demand for options around a company’s earnings announcement. This increase in demand for the options for that stock increases the implied volatility, which ultimately increases the price of the options.

Basically, options prices are inflated around earnings announcements, and as sellers of options our goal is to take advantage of these price discrepancies.

We can always create a trade with a nice probability of success using a variety of options selling strategies. At the top of the food chain would be the undefined risk options strategy known as the short strangle. Of course, if you wish to use a risk-defined trade, check out the price of an iron condor at various strike widths. I normally use short strangles or iron condors outside of the expected move and with a probability of success typically above 80%.

The reason I go outside of the expected move or range is because we know through extensive research that 80% of stocks trade within their expected move immediately following earnings.

Again, if you have any questions, please feel free to email me or post your question in the comments section below.

And don’t forget to sign up for my Free Weekly Newsletter for weekly education, research and trade ideas.

4 comments on “Top Earnings Options Plays for the Week (10/18 – 10/22)

  1. Jerrod Mason on

    Hi, Andy. Thanks for the great stuff.
    Any chance you could provide a CSV download link for the first table? I have to go through all sorts of machinations to get it in a useful form.
    Thanks no matter wat you decide.
    JM

    Reply
    • Andy Crowder on

      Jerrod,

      Unfortunately, I am unable to post a .csv for a variety of reasons, but I hope you continue to find the information useful in your trading endeavors.

      Reply
  2. Christy on

    Andy,
    What is the best time frame to put on an earnings play? Example, do you put on a trade the day of earnings and take it off before the close (assuming earnings are announced after the close)? Or do you let the trade play out after earnings? Do you set a take profit order at a certain percentage?
    Thank you.
    Christy

    Reply
    • Andy Crowder on

      Christy,

      Thanks for the question. My preference is to place the trade the day of the event. For example, if a company is due to announce after the closing bell or prior to the opening bell the next day I want to place the trade the same day. The quandary is when to place the trade the day of, so there are definitely a few decisions you have to make. Making the trade early in the trading allows for a greater premium, but risks the stock moving against you throughout the trading day. Making the trade late in the day typically offers less premium, but a more accurate range-bound trade (if you are trading iron condors or short strangles.) I hope this helps a little. I will be working on a video shortly to go over exactly how I approach earnings announcements. Stay tuned and thanks again for writing in. Good luck with all of your trading endeavors!

      Reply

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