Creating an Options Trading Game Plan

Tom Gentile

Posted in
Daily Report

By: Tom Gentile
April 28th, 2023

3 mins read

There has been many an article written lately concerning earnings.  One thing we want to emphasize or even re emphasize is how one can prepare for options trading during earnings season.

One of the Morning Reports lists is title Expensive IV.

IV is the options implied volatility.  In and around earnings an options IV tends to ramp up going into a company’s earnings report.  It is this IV that can potentially help an option trader.

Let’s say one sees an upcoming earnings announcement for a company.  If one bought to open a long call option prior to that earnings date it is possible the value of the option price could increase due to an increase in the options IV popping going in to that earnings.

Map Out Upcoming Earnings Announcements

What one can do is map out or put on a calendar, either actually hard copy calendar or on the computer.

Look at a website with earnings info like www.earningswhispers.com or check the yahoo.com earnings calendar and see what’s coming out say in the next couple of weeks.

What we also would suggest is on look at the Morning Report’s ‘Expensive IV’ List and see what options are on that list and research if the earnings is coming up in the next week or two.

Figure 1: Expensive IV List
Figure 1: Expensive IV List

The concern may be the options are expensive, which may deem them to costly to buy to open.  If that is what one deems is the case there are options selling strategies, like a Call/Put CREDIT Spread that one may be able to take advantage of.

If one believes an expensive IV option can become even more expensive they could consider buying the call option to open with the intent of selling it when it gets even more expensive.

A couple of stock that have earnings coming up next week are SRPT and LNG; both reporting on May 2.

These were confirmed by looking their earnings date up on www.earningswhispers.com.

These may be too close with their earnings for one to feel comfortable trading, but the education is to map out and see what stocks are on an Expensive IV list as they may be coming up on their earnings and see if you can find one out a week or two to consider discussing with your broker.

*Note it is best to contact or reference the actual companies investor relations to confirm the earnings date. 

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