Earnings Options Trading
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Earnings Options Trading

John F. Carter 1/17/2014

Hey everybody, this is John. Welcome to the free video for Simpler Options. I've been looking at a couple of things here. One thing I was watching here is TWTR. This had been a big move up, kind of a peak and it's been establishing a little bit of a base. You got a trend line here. Did get a little bit of some news after hours, like some kind of a little bit of an upgrade. So you can see it's up about $1.20 after hours. So I might kind of boost this up a little bit where we can start getting a little bit more of a retracement. I'm not looking for anything fantastic, but you know, pretty good.

TSLA, I still have you know a very small position in this left, just kind of for old times' sake. Wish I still had the entire position -- that's actually not true. And at this point it looks great and I don't for me in particular -- oh I've got some after hours in Twitter going there. For me in particular, this trade right here for a new entry is a little tricky. Yes, we have a squeeze but we're still extended. So again, it doesn't fit exactly with the set up of how I got into this in the first place, but I don't mind holding on to a piece of it and just looking for the next target of 175. This would be a good place to sell put credit spreads right below that fire line. So I do like that.

If we look at the SPY you can see here on the spiders we do have a squeeze setting up here. And it's just a quiet day. We have not violated any support in any way, shape or form, and just took a breath. So I think the big question that we'll see is kind of the Yen and what that does tomorrow, and I'll talk about that more in the premium video.

For earnings, we did do an earnings play on American Express. Let's take a look at that real quick. You can see it's down 95 cents. So how this works for an earnings play -- I mean this is kind of a text book earnings play where you can see we closed at 87.78, expected move is 2 dollars. OK. Implied volatility is two times, so 100 percent more than normal volatility and that's a minimum that we want to see. So we did the 87 and a half straddle, then sold about the one and a half standard deviation puts. Sold 10 of those, 10 of those and then I also did a spread for people that wanted to do a spread, the 90.95 call spread, etc. And the idea of this is essentially if we can stay within $2.17 either way, we make a lot of money on this trade. If it goes beyond that then we have to initiate some defensive measures. Of course the best thing that could happen is it trades less than this. The smaller range of trades tomorrow the more money we're going to make on this implied volatility crash. So this is a great play. I do it all the time. The key is to know how to defend it if you know, this thing were to gap down to 5 dollars.

So we're going to be holding class this Saturday, not only showing you how and why those options plays work but also importantly how to defend them you know if the move is greater than the expected move. Also to learn what the expected move means and how to work with that. There's essentially going to be four types of plays:

1. There's going to be pre earnings announcements. We've already seen that this week with Tesla, and how to play that.
2. Then you're going to have what's called the earnings run up play...earnings run up -- I don't know why I'm writing so small.
3. Day of earnings.
4. Post earnings.

So with one stock you have four opportunities. Mostly three opportunities but when they do a pre announcement, either good or bad, that's a unique opportunity that presents itself. You could do this on any stock, and ideally you want to set up criteria to know which stocks to do it on, which is what I'll cover.

This will be this Saturday, January 18th from 2 to 6 east coast time which of course is 1 to 5 central time. That's my time zone. And we're going to have a live follow up session on the 21st from 2 to 4 east coast, and on Wednesday morning from 9 to 11 east coast. And this will be setting up some live earnings trades. And then managing them live. OK. So we'll be talking about:

• The options strategies I use around earnings.
• How to determine which strategy to use and when. That's important.
• What are the best stocks for earnings plays and which ones to avoid. There are definitely some you should not be doing these on.
• The one guarantee with earnings and how to play it.
• How to play earnings with smaller accounts. And that's important too because earnings is a high probability but there are situations when you can get into a little bit higher risk.

You want to understand not only how to manage that but again how to defend yourself if things go wrong. And then once you know, it's not a big deal but you gotta know how to do it. It's like you know, when you first ride a bike you need training wheels. How to protect your accounts, OK, money management tips for earnings trades. We'll do some real live trades, we'll manage these trades lives.

If for some reason you can't be there on Saturday you can still get the course at the discounted rate and you'll just -- you'll get a copy of it in time for the live sessions if you want to attend that. This will be listed on the price for $997. since you're getting this you can still sign up for the early bird price of $497. All right. Looking forward to seeing you. Again, if you see the link -- if you don't see the link, it's simpleroptions.com/earnings. Saturday will be a lot of fun, looking forward to hanging out with you guys and gals, and see you then. Have a great trading day on Friday and we'll see you at the next update.