Top Earnings Options Plays for the Week (11/29– 12/3)

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Top Earnings Options Plays for the Week (11/29– 12/3)

It was another good week for earnings trades. I just keep chugging along, maintaining my mechanics, trade after trade, allowing the law of large numbers to lead the way.

While earnings season has passed, there are always a few companies that report outside the normal window. Next week there are three that have my attention, all of which report after the close next Thursday (December 2). As always, I hope the following list and table are helpful.

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 (11/29 to 12/03):

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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.

2 comments on “Top Earnings Options Plays for the Week (11/29– 12/3)

  1. Raymond wong on

    Could you give example of trade with figures for iron condor that is outside the expected move?
    Cos I am confused you mentioned 80% of stock trade within the expected move.
    As we tend to get profit between the two short legs of iron condor.

    Reply
    • Andy Crowder on

      Raymond,

      I typically go outside the expected range when trading around earnings. And yes, all research says that 80% of all the immediate moves after earnings falls within the expected move…which is why I always take a conservative approach and go outside the expected range to increase my probabilities even further. However, none of this matters if you are taking huge premium losses. Take risk management seriously. Allow the law of large numbers to work for you. I hope this helps.

      Reply

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