A Big Bank Trade Moving Into Earnings

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A Big Bank Trade Moving Into Earnings


As an options trader, earnings season is often one of the most enjoyable times to trade. During the heavy earnings periods, you often see plenty of large moves in individual stocks (for obvious reasons). Options can be a good way to capitalize off those big moves.

However, the biggest challenge with using options for earnings is big moves tend to be built into the options prices. To make money buying options on earnings plays, you need a big earnings surprise and for traders/investors to act in a timely manner on that surprise. At times, it doesn’t work out as well as hoped.

Conversely, sometimes the best time to use options to bet on a big move is when it’s least expected. That’s when you can frequently get a good deal on options prices.

I personally like to find cheap straddles on stocks which I think could move (but aren’t necessarily near an earnings period). A straddle is when you buy a call and a put at the same strike during the same expiration period. They are typically bought at-the-money or very near the current stock price of the underlying.

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