The Power of Overnight Trades A lot of new Members to The War Room all tend to ask the same question: What is an overnight earnings strangle? To me, it's one of the most powerful strategies we use at Monument Trader's Alliance. I'll give you a clear and concise breakdown of how this trading tactic works - so you can get a good base knowledge before our event later today. To start, the primary element of the strategy involves an options trading position called a "strangle." A strangle is a trading strategy that's used if you think the underlying security will experience a large price movement in the near future... but you're unsure of the direction. In other words, say a stock that you happen to like (in this case, let's use Home Depot) is about to report earnings. You think a strong earnings report could shoot its stock price up $10. But on the flipside, a weak earnings report could push the stock price down $10. You're unclear as to the direction of Home Depot... But either way, you have a feeling that it could make a big move. In cases like this, a strangle trade would be the perfect way to trade - because this options strategy would be profitable no matter if Home Depot makes a big move up or makes a big move down. As long as the stock makes a sharp move in price, a strangle trade will win. To enter a strangle trade on Home Depot, you'd enter two options: You'd buy a HD call option - and you'd also buy a HD put option, each with different strike prices - but both with the same expiration date. Here's how to look at this graphically... What I like most about this trade is that the total risk is limited - while the total upside is unlimited. For example, the call option has theoretically unlimited upside, while the put option can profit if the underlying asset falls. Your total risk on this trade is the only premium that you paid for the two options. Nothing more. To calculate your break-even price, simply take the entire cost of the strangle (the call price plus the put price) and add it to your call strike. That's your break-even on the upside. Then, take the entire cost of the strangle and subtract that from your put strike. That's your break even on the downside. As long as your stock moves ABOVE or BELOW either of these values, your strangle trade will be profitable. How can a strangle trade lose money? That's simple. If the stock that you think is going to make a big move remains flat or does not move high or low enough, then your strangle trade will lose money. But that's the key takeaway of my Overnight Earnings Strategy... To avoid the risk of a stock NOT making a big move, I enter into these strangle positions a day BEFORE a stock is set to make an earnings announcement (just like I will do with the Nvidia One-Day Super Trade today). After all... Earnings announcements tend to ignite the biggest one-day moves on stocks - up or down. So, adding a strangle position just before a big earnings announcement ignites a big stock move represents one of the smartest, and highest-performing strategies. Join Us Later Today! The strategy that I just used to make 36%, 84%, and 207% overnight will soon be used to trade Nvidia earnings and you're invited to sign up for the event - TOTALLY FREE! YES! Sign Me Up for the One Day Nvidia Super Trade. However, I have to tell you... This new trade will come with a slight variation - which is why it's critical that you join us when we go live on TODAY, May 21st at 2 p.m. ET... Details of this one-day trade will be revealed during this special LIVE broadcast - so be sure that you secure your spot TODAY. Just know that my overnight trade strategy has never been set up so perfectly for an earnings release, so you don't want to miss it. Earnings only come a few times per year... so timing here is critical. You only have one shot to make this play! So be sure to sign up for FREE right now! Yours in smart speculation, Bryan |
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