Top Earnings Options Plays for the Week (11/15 – 11/19)

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Earnings season is finally coming to a close next week with some big names on the docket. Walmart (WMT), Home Depot (HD), Lowe’s (LOW), Target (TGT), Nvidia (NVDA) and Cisco Systems (CSCO) will receive top billing, but there are several others that offer some interesting opportunities as well.

The Week Ahead

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.

(click images to enlarge)

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Here are a few other top earnings options plays for next week (11/15 to 11/19).

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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.

6 comments on “Top Earnings Options Plays for the Week (11/15 – 11/19)

    • Andy Crowder on

      Hanan,

      Thanks for the questions. Most of the strategies I use are options selling strategies, so my preference is to use short strangles or other various options selling strategies.

      Reply
  1. Yannis Anagnostou on

    Hi Andy. Would you consider Short Calendar a good play for earnings? I believe it’s a margin efficient strategy and since the short option expires in the back month, it is not likely to get assigned early. Thanks in advance for your time.

    Reply
    • Andy Crowder on

      Yannis,

      Thanks for writing in. Yes, you can use a short calendar and maybe I’ll write an educational about them in the near future. My preference is to use short strangles and iron condors around earnings announcements, but that is not to say that there are not other viable alternatives. I hope this helps.

      Reply

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