πππUsing Options is a great strategy during Earnings Season as Earnings reports have the potential to cause significant price swings. In fact it is quite common for a stock price to increase or decrease significantly immediately after an earnings report.
The first step when trading earnings with options is to determine what direction I think the stock could go. This is important as it will help me to narrow down which options strategies I will choose.
For example if I expect that there will be a positive price move after an earnings report, I would buy call options. Alternatively, if I expect that there will be a negative price move after an earnings report, I would buy put options.
In addition to this, I also need to consider the magnitude of volatility the stock may exhibit around an earnings report.
For example, Coinbase would be a good stock to short in the light of the recent collapse of FTX. In contrast Coca-Cola would be the contrasting opposite.
It is also important to do indepth research prior to forming an opinion about how those earnings will be perceived by the market.
A note of caution to novice investors. Trading options can pose significant risks if they are wrong about their expectations. Options can magnify losses because of the potential for large swings after an earnings announcement.
So in using Options to trade during earnings season, it is important to consider the risk appetite of the individual investor and his trading goals. If Options trading is used well, the gains are also magnified too.
@OptionsTutor @MillionaireTiger @TigerStars @CaptainTiger @Tiger_chat
Comments