Bryan Bottarelli, Head Trade Tactician, Monument Traders Alliance Earnings are one of my favorite catalysts for trading options. However, it's crucial to know the right and wrong way to trade them. One of the most effective methods for trading earnings I've ever come across is called "overnight trading." There are several reasons I love this strategy. - It's simple (all you need to do is make ONE trade)
- It offers the potential for fast profits in less than 24 hours
- It also provides big move potential depending on the earnings result
Like yesterday in The War Room, when I closed a 41% overnight winner on an earnings play using this exact strategy. Let me set the table for how it all went down... On Monday, I noticed Oracle (ORCL) was set to report earnings the next day. ORCL's options were implying a 7.1% move in share price post-earnings. The options volume in Oracle was 3.9x normal, with puts leading calls 10:9. Of course, this pre-earnings data is all theory. The truth is nobody knows which direction a stock will go ahead of earnings. Which is why it's highly risky to bet on only a call or a put option. If you're wrong, you can lose big. However, my overnight trading strategy allows me to avoid the risk of being wrong. Instead, I get positioned on both calls AND puts, that way I could make a profit as long as there's a big move in either direction. And on Tuesday ahead of earnings, I got that big move on ORCL. |
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