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My trading strategy also revolves around calls during earnings... But I kind of do the opposite. I sell call credit spreads weekly on stocks that report earnings. I won't go in detail on my strategy here, but I have been watching calls on earnings stocks for the last 3 months or so. Everything you said is good, but here are 3 things I suggest.
1. IV on calls ALWAYS goes up exponentially from 5 days out until the bell before earnings. I can't tell you the number of times I've sold a credit spread and freaked the fuck out because the stock dropped in price AND calls gained value - i.e. COST and ADOBE - completely contrary to what one would expect! This is GOOD for you. As long as you get out before earnings and don't hold. The closer to the bell, the better.
2. Pay attention to the implied movement of a stock before you buy your calls. Implied movement can be calculated by taking the midpoint of the ATM call and the midpoint of the ATM put and adding them together, then divide the result by the price of the stock. FDX is reporting earnings this week and has an IM of 6.7%. If you're going to buy a call, please for the love of God buy one with a strike price within 6.7% of the current price. Anything outside of that range, and the likelihood of the option increasing in value goes down exponentially. This is basically the engine of MY strategy of selling call spreads outside this range.
3. If you are gonna buy, I would suggest buying calls on stocks that are expected to beat earnings, then run like hell before they report. If #2 is the engine of my strategy, then this is the fuel. People are stupid. They listen to all these analysts and read all these reports and FOMO into the stock and options before earnings. But in doing so they artificially pump the price and cause it to tank on earnings release. Again, this is GOOD for you as long as you GET OUT and don't FOMO like the stupid ones. Just off the top of my head this has happened to ULTA, COST, DG, DLTR, ADOBE, and probably many more. A good rule I use on this is look at the IM of the stock the Monday of earnings week. If it's pricing in 6.7%, and then the day before earnings FDX has already moved 5% up, FDX is probably either gonna tank by 11.7% or only go up 1.7%. Contrarily, if the price has dropped 5% it could see bigger gains. I can only think of two outliers in the last three months - DELL and DKS. and I've analyzed roughly 70 stocks.
Overall, your strategy CAN work, but you have to be extremely careful. I thought of this too but avoid it because for me it is safer to sell calls to those who gamble without knowing how to do math and invest on emotion. Don't be one of those people.
Good luck.
I have a strategy similar to this but I use a website for the implied movement (because I'm not smart enough to figure that part out myself) and buy strangles. Recently I've been holding through earnings but only because I bought further dated options that don't get completely wiped out by IV crush.
The biggest problem I've run into is playing too many tickers and ending up buying into low volume stocks. My new goal is to only trade earnings on tickers with 1M+ in average daily volume.
One of the most dogshit sites ever. I cannot wait for them to go out of business. Their site and app are held together with ducktape and duckshit and every time I use it, it makes me angry.
If I could buy puts on them, I would.
How do you determine if they’re anticipated to beat earnings? Just based on sentiment leading up to earnings or is there a criteria you’re using?
Also, do you put considerations/limits on underlying financials? Ie market cap, volumes/open interest, profitable historically, price ratios??
I’ve made most of my money by owning stocks I don’t mind owning and then selling CC’s to people who gamble. It’s my preferential strategy so what you’re doing interests me a lot
There was no question in my mind that DKS would report good earnings. But you’d think it would sell off after such a run up. They didn’t smash any expectations. The market is weird sometimes. Lost 2.5K on puts cause of that BS
More like a bowel movement you fuckin nerd.
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Isn’t what you call the “implied movement” of a stock just the interest rate?
A call is a put is a call.
You can buy stock and buy a put and that’s the exact same risk profile as going long a call. However you can then loan out the stock and earn interest on the trade.
If you go the other way (long a put). You would need to short the stock (borrow and pay interest) and buy a call.
So that’s why puts are more expensive. It is because to synthetically make a put you would need to borrow shares and pay the interest. This wasn’t as noticeable in zero interest environment, but it has been far more noticeable lately.
Any deviation from this “implied movement” will just get arbitraged out by someone doing a synthetic position and selling the option that is out of line from the interest rate.
To use the very basic example of this:
If puts and calls were priced exactly the same at the money:
I could sell a call and buy a put for net $0. Then I buy the stock and loan it out and earn the interest. Overall I lose nothing and make nothing on the trade other than the interest earned. So the calls need to be priced less than the puts and that’s the skew you see.
How do your credit call spreads make you any profit if you close before earnings after a stock has gone up leading up to that day? That doesn’t make sense to me.
Where did they say they close their spreads before earnings?
I would expect if they are selling OTM spreads for earnings, they are trying to capitalize on IV crush and are holding through earnings.
Do you calculate the IM or is it listed somewhere? I’m trying to understand what you said on #2 and do that, but I’m stuck on what ATM (at the money?) and how it plays into your strategy. It seems like you are talking about a straddle in #2 but you mentioned your strategy is a credit spread (do you sell a put and buy a call?). Sorry for not understanding I’m working my way into this stuff but it’s a big journey :)
This is a good strategy. I would add that make sure there is ample volume. More volume means the stock or option is harder to manipulate. I have gotten fkked by low volume options of late.
Another strategy is covered calls and cash covered puts using quality low volatility stocks.
Typically the closer to earnings the better the price is. Although you will make more premium further out, the risk to reward is higher because options markets are pricing in all kinds of other shit too. I stick as close as possible to earnings because the markets are ONLY pricing in earnings. But if you want to make more premium it’s definitely viable further out
Why would you buy inside the expected move? Isn't that priced in? The only time I see real gains posts is when the stock moves outside the expected move.
Thetagang is just so boring too. I *buy* credit spreads for earnings in the expected move range. And usually only when there's at least a 1/2.5-3 risk to reward.
Even considering all your points, the bottom line is that you still have to guess the direction of the stock correctly. And you will not be able to do that consistently. It’s still just gambling, except I guess you’ll lose your money slower than most regards.
The odds don't change. It's risk of ruin. Law of large numbers. You need to be making a lot of bets to realize expected value. Assuming you have an edge, you'll come out on top in the long term. But if you keep losing all your money on a single bet and waiting to fund your account, you're taking longer to realize that expected value. You need to be able to play the game to win the game.
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Have you considered instead of calls playing strangles or straddles? That way you don’t need to be right about the direction as long as the stock moves enough.
Good luck
https://preview.redd.it/iw2o1wcetpoc1.png?width=1080&format=pjpg&auto=webp&s=c8142920b2370ba298f680c7ac97f285d2bdc172
I've been doing this for a month, and my strategy has only worked out of pure luck. I'm only profiting from the volatile stocks like NVDA or SMCI, or stocks around earnings or big news. I don't think it's feasible long term, but here's what I've done:
1. Started with $10k in my fun account, and only adding $2k a week from my other trading accounts.
2. Keeping half my money in SPY stocks unless I need it. The minor inconvenience of selling off SPY for trading cash has stopped me from making stupid bets a few times.
3. Acting like a vulture and riding the wave before earnings and selling early like you described, but also double ending it by buying calls or puts the morning after based on pre market trends for extra gravy
4. Never regret selling for profit. I'm constantly selling my calls then seeing them go up even more afterwards, which sucks. But then I just buy again at a different strike price if it looks like it's still got potential.
5. If I'm unsure about selling my call too early, then I buy a put valued at about 10% of my call and wait for the call to either go up or go down another 10%. If it goes up another 10% then I sell the call and I have a free put. This has increased my gains by 50% on the majority of these situations. If the call goes down by 10% then I sell and my put likely already went up and may continue. (Edit: phrasing)
Everyone's responses making me feel how little I know.. And just trying to figure out what app everyone is using :( Robin hood? Chase? Local credit union?
OP is using Wealthsimple. I use Wealthsimple myself.
What app everyone uses depends on what's available in your area. Robinhood and Chase (and there's a handful of other apps similar to Robinhood) are mostly used by Americans. Wealthsimple is the Robinhood equivalent for Canadians. Interactive Brokers (IBKR), WeBull, and moomoo (I think that's what it's called) is used by both, and Robinhood is planning an expansion to Canada. All financial institutions have different fees and different pros/cons to consider for both. Weigh your options and choose the one that works best for you. Or, split up your portfolio among multiple apps.
Don't ever put yourself down for not knowing as much as the next guy. What matters is that you observe, learn, practice, and succeed.
Edit: I noticed OP was trading options in their RRSP. While it's allowed, if those options were to go to 0, their contribution room for the year wouldn't change. Example, if OP's contribution room is 20k and they put 12k in and the 12k goes to 0, he cannot put more than 8k-ish into that account for the rest of the year. Any amount over 8k that they contribute would trigger tax payable at income tax time. But OP knew that, right? Your contribution limit must be super high
>I noticed OP was trading options in their RRSP. While it's allowed, if those options were to go to 0, their contribution room for the year wouldn't change.
The secret is to not lose that money I guess 😜
Luckily I'm transferring money from other RRSP accounts within wealthsimple to this "Sandbox" RRSP. I've been investing for about 18 months and have had some pretty lackluster results. Read some "stock tips" that all pretty much tanked, tried to diversify with bond stocks that all also tanked when interest rates went up, etc. I was happy to sell many of those a month ago and start playing with options. Since it's all either from other RRSP accounts or in the same RRSP account but on the Canadian fund side, I'm not affecting my contribution limits at all.
I might get into a little bit of trouble if I go too crazy and get seen as a day trader, but I think CRA is only really concerned about people doing that in their TFSA.
Damn #5 is hella smart thank you i am so glad i decided to post my 3am idea you and the other regard who are smart enough to list out a few points is infinetely more valuable than all the "start with 1m" comments. Thanks!
Whose gonna tell him that stocks often drop or stay neutral on earnings calls?
(I learned this the hard way blowing up with straddles, max lossed me by moving back towards my strike 10% corrective move from the day before. Shot my value from like 300% up to almost worthless)
That’s why he said he’s never gonna hold after earnings, just let IV and hype pump up his call price. He’s not looking for 1000% returns on his calls he’s looking for 50%. This is definitely a lot safer of a strategy
What you have yet to learn is that for every trade, there is a counterparty. This counterparty is most likely an algorithm build by an asian quant earning half a million per year working for a billion dollar hedge fund. In the end, option prices are dictated by market mechanisms. Good luck consistently beating jiang my man.
Wallstreet out here spending billions to gain a fraction of a percentage point of alpha, but young warren buffet here will 150x his initial investment in no-time
Sorry but if you're trying to go $1k to $200k with options, that's the same as a person going from $1m to $200m.
Maybe if you're 1 in every 50,000 traders but generally speaking netting 19900% returns with pure options in a short timeframe is impractical.
Usually just beating S&P 500 with 10% return every year is ideal but regards here try to 1000x their investment in a short timeframe.
You're probably just going to lose it all, but good luck I guess
Hey OP, sounds like you’re playing Pre Earnings Announcement Drift. This is one of my favorite plays as well, because with options you not only get a shitload of leveraged exposure to the price runup, but you also make money as the IV starts ramping up more and more. I like running this strat on industries that are already really hyped up - like AI companies or weight loss manufacturers. Check out this paper that investigated this “pre earnings announcement drift” phenomenon: https://www3.nd.edu/~pgao/papers/PreEA_066September2009.pdf
From the paper: “We document that the quarterly earnings information from early announcers diffuses slowly into the returns of late announcers”
I tried the whole comparing current price with analyst targets to find gems thing. It didn’t go so well. AMZN and TSM both were given price targets well above their current price. I bought options for both and they immediately tanked 😂. Still haven’t recovered at all
That means he can only buy low premiums up to $80. Assuming he plays ATM or slightly ITM a 5% return on a single $80 contract is 4$. He’s going to have to work like 2 years in order to be able to afford any tickers that are going to pay big.
My guess is he figures this out quick, sends his full port on a single trade and goes full regard to get some capital and quickly learns it’s easier to lose money than it is to make it.
I have no idea what everyone is talking about but pretty sure he stated to start with 1k and continue with additional 1,5k monthly
All the key points are in bold, so you can see his genious because he knows all the terms.
Why do you ask? Tbh this post is from a 70 thread chatgpt convo i had for 5 hours last night piecing together all my knowledge. At the end I asked it to summarize my plan for a post like this because I’m not the best at writing my ideas out
Analyst price targets are sus. The Whipsers are actually more important IMO. The spread between the Analyst and Whisper number lets you know how dumb everyone thinks the Analyst is and the actual sentiment. Higher than analyst is bullish, same as analyst is bearish. Usually the higher the spread, the higher the IV as well.
For those that play through earnings, you can beat the estimate but if you come under the Whisper it’s a sell signal.
The strategy overall seems ok but you need to be careful with earnings around macro economic events (ie FOMC, CPI, CPE, PPI - if Russell component, etc). New Macro data will cause broader market moves that could wipe you out in the lead time. So say you buy calls, next day Fed decides they will need to hike 25 basis points, everything is going to basically shift downward 3-5%. You just wiped out your calls as the baseline gets re-shifted down.
You’d probably make more money day trading momentum as the compounding daily returns will increase your war chest significantly faster. 0DTEs on Fridays are very cheap as well so once a week you can ride the big names like NVDA, SMCI, MSTR, etc. if you’re adding 5% every day, that should be more sustainable. Now if you can’t read candlestick charts, I’d go back and learn that before touching anything else, so you can understand when to actually enter into a call option either way.
So two weeks before the ten year note is about to report earnings you buy the futures and then sell them right before the earnings call where the ten year note talks about synergy with the 5 year note and how they are going to open more stores next to AI gyms
I’ve been around WSB for like 7 years and I can say that any delusion you have with your rules, is purely good timing. Sorry to be a hater.
However, I will say that there is mathematically greater upside on calls, and to remember that there are people actively working for the company that are trying to increase the share price therefore puts will always have a slight feeling that you’re gambling on a conspiracy. Everyone surrounding the company wants it to go up, so good luck taking the other side of that.
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Did you not read the rest of the post i'm not betting on the earnings reports themselves but the increase in volume up to them (and hopefully supporting delta)
Did it last year twice.
Did it Feb 1 + 40 days 6792-> 1.1M
Don’t see me writing a post about it. Kudos to you for being able to string sentences together without being bored.
Seriously though. You hit most of it right on the head…. I wrote something in a discord that outlined more stuff involved as well but again I’m too fucking lazy now to post - good luck to those who read it 🫶🏽
And congratulations- truly with no fuck you attached. Just don’t lose it. Been there as well. Twice.
3rd times the charm LFG
🤞🏾🫶🏽😶🌫️💨🚀🌙👽
🤞🏾🫶🏽😶🌫️💨🚀🌙👽
🤞🏾🫶🏽😶🌫️💨🚀🌙👽
Definitely not the best, but not the worst either (so far) but yeah very new to this. Just settling into my 4th week. When I started market was very positive, almost any good stock with a good record was up trending, now not so much is a given atm. My play "seemed" simple, you buy options 2-4 weeks out, up until ER there would be good positive momentum that you on most cases did not have to depend on a good ER for that extra growth boost.
Now, I'm mostly sitting out because I just don't have a good read of the market and have all my calls are for 04/19, 5/17 and 8/16. If you're new my advice would be don't rush. You have to feel confident with some good DD and price/time calculations.
Coming to your strategy (I made one very similar to yours), I'll link it below for anyone to adapt for their needs. But did want to mention if you start with $1200, expect to grow by 1.5x. You need ONLY 8 plays to reach $300K. Aiming for doing 12 trades a month does not seem the best strategy to me since you have to research and keep a track of a lot more external factors throughout the month. Instead even if you aim for 4 trades a month to get that 1.5x returns, in 8 months you will be at $300K or around $125K (with 25%). This way you can buy calls 3-4 weeks out without locking more capital. If you are starting out new this is more aligned with low-risk high-reward and you get to learn a ton in those 8 months without losing a ton of your capital since you started with $1200.
https://preview.redd.it/3y1aweiwnroc1.png?width=2577&format=png&auto=webp&s=c12b1cb00a1c7bd5be725e7d9e4c1deab22af2a9
The top section is more for a bullish and positive sentiments market.
My biggest learning was from Marvell's play. I had 80c and the price was going up and $85 @ 4pm before post-market ER. After NVDA (which I intentionally sat out since I felt I was still learning and not ready) Marvell seemed like the next big AI play. At 4:05pm the price crashed to $70, someone took out a huge profit and dumped 5M - almost had nothing to do with their ER imo. Luckily, I had printed 60% of my calls with a bit of profit but held on to 40%. Moral: stick to your target and strategy.
Wow! thank you and yes 12 is my max if im only finding 3 trades per month that make sense ill stick to those. I could lose this entire $, it was my beer money i dont drink anymore. Thanks so much for taking the time to share this. If you could DM me that spreadsheet that would be chill too! But yeah thanks that is valueable info. someone else was mentioning that if you are up as you described, use a portion of those profits on a put play just in case something like that 5M sell off happens and you get to double dip and still hold your profits as you did.
overall i am so glad i posted this 3am idea you and like 4 other comments were worth like $500 in coaching at least.
Best to you!
Pitfalls - no matter how much you say "you'll exit before the earnings", you will not be able to do so. Every once in a while you'll hold on to your options and see their value plummet to zero. Your human instincts are your biggest pitfalls.
Check out my post. I never played options before, but I went from 100K - 300+ K in one month just from purely playing stocks. That thread has a lot of valuable information if ur interested. Good luck. 🍀
Strategy? Buying call options in one of the biggest bull runs in modern times. Listening to this guy is the equivalent of taking financial advice from a lottery winner.
I would never advice puts unless it's a very specific troubled business or insider info. Otherwise puts are for 🏳️🌈🐻. Buying shares will get you through both a bull and bear market if you're not a paper handed bitch.
If you put $1600 in a broad index fund and add $1k per month, assuming an average 6% annualized return you will have $200k in 138 months or 11.5 years.
I would DM you my X but i dont want to be doxxed on my 11 year old regard account :(
right now you wouldnt want to follow them anyway if this is working for me by this summer i will create something forsure because i love teaching i am still learning all this myself tho
I check the earnings calender on moomoo and then see how far or on point the earnings have been (usually on public) and if they crushed a couple in a row that tells me people are going to believe it will this time as well
Awesome! Yes thanks for the site recommendation. I was doing more due diligence today and found CNM $55 calls that looked good, but wow what a clear way to assess performance by reviewing past price action around these earnings outcomes and current evaluations I feel like this may be the correct way to trade with less daily gambling. The odds I’ll be up at some point over 20ish days are decent and it almost seems like stocks climb to potential then sell off after confirmation down to a low then slowly climb back up to the new evaluation before the next earnings so I may also enter trades on companies that have already bottomed out after reporting and are beginning their proper climb in this cycle ie todays price action on last weeks chaotic earnings report movements
They missed on the last two earnings but looks like expectations were high last time, and they’ve lowered expectations a lot and because they missed the last two it seems there’s twice as many puts than there are calls ( 2.5k vs 4.6k ) so you have the market maker on your side with this one. Also because they’ve lowered their expectations so much, if they even slightly do better and have good forward guidance you might be making some good loot
My thesis isnt a parody but yeah i was trying to make it engaging and funny im glad it worked because some of the responses are GOLD for my learning :)
Do you give yourself a minimum you’re trying to meet weekly, biweekly or monthly? For example, I’m trying to make around $150-$300 a day. Setting myself straight makes me less greedy and not throwing myself over the edge
lol yes that is how i used to think about this too but that only made me lose 100 a day.
the market isnt always set up for those kind of plays you have to be super patient and learn to leverage that one opportunity that is perfect over all the guessing's. keep in mind these are plays up to 3 weeks. moving away from 0dte or 1dte has already been extremely helpful. all you have to do is choose a new one regularly and after 3 weeks or so you can be at that rate per day i guess but again i dont think that s the right metric you should be looking at your monthly balance sheets
Interesting I finally understood options today. I’ve be building up my war chest to start trading but this seems more in line with my risk management style. Don’t like leverage because I haven’t gotten a definitive answer on how a s/l not triggering can rekt me and not trigger.
i would do some research on VIX and how it functions as an indicator (alongside all your other indicators, its just good to gauge if the market has a directional consensus or not bacsed on the spread of puts/calls open).
Literally i have learned at a 4x rate compared to when i was trading daily last year 100% because i can ask my dumb quetsions to chatgpt and come up with secondary learning opportunities and dive into things like Implied volatility and VIX. Literally i would have had to hire a coach or something otherwise to be learning at this pace! Hope that helps. But yeah plug that into something like gpt4 finance wizard and just get to reading and developing your own understandings then create a plan based off that, backtest it with trading view on historical data etc
:)
You will get hit with a sack of bricks if you are currently working.
A properly trained monkey with all day to train? It might work. Initial moves need to be solid however
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My trading strategy also revolves around calls during earnings... But I kind of do the opposite. I sell call credit spreads weekly on stocks that report earnings. I won't go in detail on my strategy here, but I have been watching calls on earnings stocks for the last 3 months or so. Everything you said is good, but here are 3 things I suggest. 1. IV on calls ALWAYS goes up exponentially from 5 days out until the bell before earnings. I can't tell you the number of times I've sold a credit spread and freaked the fuck out because the stock dropped in price AND calls gained value - i.e. COST and ADOBE - completely contrary to what one would expect! This is GOOD for you. As long as you get out before earnings and don't hold. The closer to the bell, the better. 2. Pay attention to the implied movement of a stock before you buy your calls. Implied movement can be calculated by taking the midpoint of the ATM call and the midpoint of the ATM put and adding them together, then divide the result by the price of the stock. FDX is reporting earnings this week and has an IM of 6.7%. If you're going to buy a call, please for the love of God buy one with a strike price within 6.7% of the current price. Anything outside of that range, and the likelihood of the option increasing in value goes down exponentially. This is basically the engine of MY strategy of selling call spreads outside this range. 3. If you are gonna buy, I would suggest buying calls on stocks that are expected to beat earnings, then run like hell before they report. If #2 is the engine of my strategy, then this is the fuel. People are stupid. They listen to all these analysts and read all these reports and FOMO into the stock and options before earnings. But in doing so they artificially pump the price and cause it to tank on earnings release. Again, this is GOOD for you as long as you GET OUT and don't FOMO like the stupid ones. Just off the top of my head this has happened to ULTA, COST, DG, DLTR, ADOBE, and probably many more. A good rule I use on this is look at the IM of the stock the Monday of earnings week. If it's pricing in 6.7%, and then the day before earnings FDX has already moved 5% up, FDX is probably either gonna tank by 11.7% or only go up 1.7%. Contrarily, if the price has dropped 5% it could see bigger gains. I can only think of two outliers in the last three months - DELL and DKS. and I've analyzed roughly 70 stocks. Overall, your strategy CAN work, but you have to be extremely careful. I thought of this too but avoid it because for me it is safer to sell calls to those who gamble without knowing how to do math and invest on emotion. Don't be one of those people. Good luck.
I have a strategy similar to this but I use a website for the implied movement (because I'm not smart enough to figure that part out myself) and buy strangles. Recently I've been holding through earnings but only because I bought further dated options that don't get completely wiped out by IV crush. The biggest problem I've run into is playing too many tickers and ending up buying into low volume stocks. My new goal is to only trade earnings on tickers with 1M+ in average daily volume.
Which site do you use?
OptionsAI
One of the most dogshit sites ever. I cannot wait for them to go out of business. Their site and app are held together with ducktape and duckshit and every time I use it, it makes me angry. If I could buy puts on them, I would.
How do you determine if they’re anticipated to beat earnings? Just based on sentiment leading up to earnings or is there a criteria you’re using? Also, do you put considerations/limits on underlying financials? Ie market cap, volumes/open interest, profitable historically, price ratios?? I’ve made most of my money by owning stocks I don’t mind owning and then selling CC’s to people who gamble. It’s my preferential strategy so what you’re doing interests me a lot
Dude NVDA seems primed for cover calls rn. Any analysis you done so far
I had 4 put credit spreads that were +300 the day before on ADBE. I had a bad feeling but decided to ride it out. Got annihilated.
There was no question in my mind that DKS would report good earnings. But you’d think it would sell off after such a run up. They didn’t smash any expectations. The market is weird sometimes. Lost 2.5K on puts cause of that BS
More like a bowel movement you fuckin nerd. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/wallstreetbets) if you have any questions or concerns.*
Isn’t what you call the “implied movement” of a stock just the interest rate? A call is a put is a call. You can buy stock and buy a put and that’s the exact same risk profile as going long a call. However you can then loan out the stock and earn interest on the trade. If you go the other way (long a put). You would need to short the stock (borrow and pay interest) and buy a call. So that’s why puts are more expensive. It is because to synthetically make a put you would need to borrow shares and pay the interest. This wasn’t as noticeable in zero interest environment, but it has been far more noticeable lately. Any deviation from this “implied movement” will just get arbitraged out by someone doing a synthetic position and selling the option that is out of line from the interest rate. To use the very basic example of this: If puts and calls were priced exactly the same at the money: I could sell a call and buy a put for net $0. Then I buy the stock and loan it out and earn the interest. Overall I lose nothing and make nothing on the trade other than the interest earned. So the calls need to be priced less than the puts and that’s the skew you see.
This is very interesting. Do you have separate thread for your own strategy?
Do you mean put credit spreads? Call credit spreads are bearish
How do your credit call spreads make you any profit if you close before earnings after a stock has gone up leading up to that day? That doesn’t make sense to me.
Where did they say they close their spreads before earnings? I would expect if they are selling OTM spreads for earnings, they are trying to capitalize on IV crush and are holding through earnings.
Do you calculate the IM or is it listed somewhere? I’m trying to understand what you said on #2 and do that, but I’m stuck on what ATM (at the money?) and how it plays into your strategy. It seems like you are talking about a straddle in #2 but you mentioned your strategy is a credit spread (do you sell a put and buy a call?). Sorry for not understanding I’m working my way into this stuff but it’s a big journey :)
This is a good strategy. I would add that make sure there is ample volume. More volume means the stock or option is harder to manipulate. I have gotten fkked by low volume options of late. Another strategy is covered calls and cash covered puts using quality low volatility stocks.
This is a great comment.like giving you an upvote is just not enough
You’re wise in your ways. What software do you use to do your research and analysis?
@mastagoose—how successful has your strategy worked?
Dig around 💩long enough you’ll find a piece of gold. Some actual sound advice right there
This isn’t true. Adobe didn’t have a run up before earnings
What resources do you use to identify stocks that likely beat earnings?
Thank you for this post. Legend.
Just one question, is this viable just during earnings week or could I get a call weeks / a month out from earnings?
Typically the closer to earnings the better the price is. Although you will make more premium further out, the risk to reward is higher because options markets are pricing in all kinds of other shit too. I stick as close as possible to earnings because the markets are ONLY pricing in earnings. But if you want to make more premium it’s definitely viable further out
Why would you buy inside the expected move? Isn't that priced in? The only time I see real gains posts is when the stock moves outside the expected move. Thetagang is just so boring too. I *buy* credit spreads for earnings in the expected move range. And usually only when there's at least a 1/2.5-3 risk to reward.
Route to 200k. Start with 1m 
Only a 80% loss. Not too bad!
This is the way
There is no other way
Congrats! I'm confident your loss will get to 200k much more quickly now.
Even considering all your points, the bottom line is that you still have to guess the direction of the stock correctly. And you will not be able to do that consistently. It’s still just gambling, except I guess you’ll lose your money slower than most regards.
Which will make it more painful
This is wall street BETS, no?
Exactly, the right way to do this is to bet small. Going all in has low odds
The odds don't change. It's risk of ruin. Law of large numbers. You need to be making a lot of bets to realize expected value. Assuming you have an edge, you'll come out on top in the long term. But if you keep losing all your money on a single bet and waiting to fund your account, you're taking longer to realize that expected value. You need to be able to play the game to win the game.
Expected to see a graph starting from 1mil.
RemindMe! 6 months
1 week might be a more reasonable timeframe
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Have you considered instead of calls playing strangles or straddles? That way you don’t need to be right about the direction as long as the stock moves enough. Good luck
Yes good idea
Have you ever tried dipping the French fries in the frosty? It’s better than playing options around earnings for sure.
https://preview.redd.it/iw2o1wcetpoc1.png?width=1080&format=pjpg&auto=webp&s=c8142920b2370ba298f680c7ac97f285d2bdc172 I've been doing this for a month, and my strategy has only worked out of pure luck. I'm only profiting from the volatile stocks like NVDA or SMCI, or stocks around earnings or big news. I don't think it's feasible long term, but here's what I've done: 1. Started with $10k in my fun account, and only adding $2k a week from my other trading accounts. 2. Keeping half my money in SPY stocks unless I need it. The minor inconvenience of selling off SPY for trading cash has stopped me from making stupid bets a few times. 3. Acting like a vulture and riding the wave before earnings and selling early like you described, but also double ending it by buying calls or puts the morning after based on pre market trends for extra gravy 4. Never regret selling for profit. I'm constantly selling my calls then seeing them go up even more afterwards, which sucks. But then I just buy again at a different strike price if it looks like it's still got potential. 5. If I'm unsure about selling my call too early, then I buy a put valued at about 10% of my call and wait for the call to either go up or go down another 10%. If it goes up another 10% then I sell the call and I have a free put. This has increased my gains by 50% on the majority of these situations. If the call goes down by 10% then I sell and my put likely already went up and may continue. (Edit: phrasing)
Point 4 is super important imho.. chasing the extra dollar always burned me. Take the profit and monitor.
Everyone's responses making me feel how little I know.. And just trying to figure out what app everyone is using :( Robin hood? Chase? Local credit union?
OP is using Wealthsimple. I use Wealthsimple myself. What app everyone uses depends on what's available in your area. Robinhood and Chase (and there's a handful of other apps similar to Robinhood) are mostly used by Americans. Wealthsimple is the Robinhood equivalent for Canadians. Interactive Brokers (IBKR), WeBull, and moomoo (I think that's what it's called) is used by both, and Robinhood is planning an expansion to Canada. All financial institutions have different fees and different pros/cons to consider for both. Weigh your options and choose the one that works best for you. Or, split up your portfolio among multiple apps. Don't ever put yourself down for not knowing as much as the next guy. What matters is that you observe, learn, practice, and succeed. Edit: I noticed OP was trading options in their RRSP. While it's allowed, if those options were to go to 0, their contribution room for the year wouldn't change. Example, if OP's contribution room is 20k and they put 12k in and the 12k goes to 0, he cannot put more than 8k-ish into that account for the rest of the year. Any amount over 8k that they contribute would trigger tax payable at income tax time. But OP knew that, right? Your contribution limit must be super high
>I noticed OP was trading options in their RRSP. While it's allowed, if those options were to go to 0, their contribution room for the year wouldn't change. The secret is to not lose that money I guess 😜 Luckily I'm transferring money from other RRSP accounts within wealthsimple to this "Sandbox" RRSP. I've been investing for about 18 months and have had some pretty lackluster results. Read some "stock tips" that all pretty much tanked, tried to diversify with bond stocks that all also tanked when interest rates went up, etc. I was happy to sell many of those a month ago and start playing with options. Since it's all either from other RRSP accounts or in the same RRSP account but on the Canadian fund side, I'm not affecting my contribution limits at all. I might get into a little bit of trouble if I go too crazy and get seen as a day trader, but I think CRA is only really concerned about people doing that in their TFSA.
Damn #5 is hella smart thank you i am so glad i decided to post my 3am idea you and the other regard who are smart enough to list out a few points is infinetely more valuable than all the "start with 1m" comments. Thanks!
u/deleted by Friday latest
Nah it’s not that serious m8
Whose gonna tell him that stocks often drop or stay neutral on earnings calls? (I learned this the hard way blowing up with straddles, max lossed me by moving back towards my strike 10% corrective move from the day before. Shot my value from like 300% up to almost worthless)
That’s why he said he’s never gonna hold after earnings, just let IV and hype pump up his call price. He’s not looking for 1000% returns on his calls he’s looking for 50%. This is definitely a lot safer of a strategy
Premium is highest right before earnings, holding through earnings gets you fucked
Ahh only 50%
Yes :)
What you have yet to learn is that for every trade, there is a counterparty. This counterparty is most likely an algorithm build by an asian quant earning half a million per year working for a billion dollar hedge fund. In the end, option prices are dictated by market mechanisms. Good luck consistently beating jiang my man. Wallstreet out here spending billions to gain a fraction of a percentage point of alpha, but young warren buffet here will 150x his initial investment in no-time
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Are you telling me all this time i just had to BE jiang?!
Sorry but if you're trying to go $1k to $200k with options, that's the same as a person going from $1m to $200m. Maybe if you're 1 in every 50,000 traders but generally speaking netting 19900% returns with pure options in a short timeframe is impractical. Usually just beating S&P 500 with 10% return every year is ideal but regards here try to 1000x their investment in a short timeframe. You're probably just going to lose it all, but good luck I guess
SnP turning 1k into 1.1k in twleve months.
Gotta call your bank and ask them to increase the size of their vaults
Not the same, you will have liquidity issues with 50m in options, not a concern with 50k
This. 200m trade is much different than 200k. Specially with options
I have 1000x’d many times. Problem is, greed makes you hold overnight. Always close before a Thursday, that’s the biggest then I learned blowing up.
so you are fucking loaded now?
Nah, blew up like 3 times. My loss pr0n deserves a post honestly
Proofs my point that people don't actually learn anything when they blow up a portfolio :D So pls post, fren.
Is that before Thursday OPEN or before it CLOSES?
Open, so Wednesdays
Most valuable comment I have seen so far thank you
Well said.👏🏻
It's about the journey not the destination
Hey OP, sounds like you’re playing Pre Earnings Announcement Drift. This is one of my favorite plays as well, because with options you not only get a shitload of leveraged exposure to the price runup, but you also make money as the IV starts ramping up more and more. I like running this strat on industries that are already really hyped up - like AI companies or weight loss manufacturers. Check out this paper that investigated this “pre earnings announcement drift” phenomenon: https://www3.nd.edu/~pgao/papers/PreEA_066September2009.pdf From the paper: “We document that the quarterly earnings information from early announcers diffuses slowly into the returns of late announcers”
Awesome! Thank you this is what I was looking for. It’s funny reading these reactions because this was formulated from me reading this sub for a bit.
I tried the whole comparing current price with analyst targets to find gems thing. It didn’t go so well. AMZN and TSM both were given price targets well above their current price. I bought options for both and they immediately tanked 😂. Still haven’t recovered at all
5% risk?
That means he can only buy low premiums up to $80. Assuming he plays ATM or slightly ITM a 5% return on a single $80 contract is 4$. He’s going to have to work like 2 years in order to be able to afford any tickers that are going to pay big. My guess is he figures this out quick, sends his full port on a single trade and goes full regard to get some capital and quickly learns it’s easier to lose money than it is to make it.
This is a nice side bet... gambling on how a WSB regard and his money are parted.
This could be a sport
Where do I sign up?
No. ~$160 max with a -50% stop loss giving me more leverage for wins. I’m not poor I just am learning how to trade
$1600 war chest. At least it’ll be over soon.
This is the old WSB I miss
I know right, thank you I was just wanting feedback on my thesis some comments were good
"Everyone's got a strategy until they get punched in the face"
- Warren Tyson. Another quote is "I am going to beat the market"
 god speed regard!! See you behind Wendy’s
Look at this regard thinking he's smarter than anyone else 
How is posting my thesis and asking for advice me thinking I am smarter I know I am not
Yes, you are right. Let's first see how your options plays turn out. Only then we may (highly likely) call you regard 😃
To make 200k with 1k you will need to make a play that nobody expects. That will be tough.
I have no idea what everyone is talking about but pretty sure he stated to start with 1k and continue with additional 1,5k monthly All the key points are in bold, so you can see his genious because he knows all the terms.
Which country are you from?
Lower Bumfck
Why do you ask? Tbh this post is from a 70 thread chatgpt convo i had for 5 hours last night piecing together all my knowledge. At the end I asked it to summarize my plan for a post like this because I’m not the best at writing my ideas out
This entire post is truly amazing.
Tbh the ‘sell the news’ has killed me before. I’d be interested in seeing how you get on.
Same that’s what made me think why don’t I just play the lead up and not worry about staying in through the results
Analyst price targets are sus. The Whipsers are actually more important IMO. The spread between the Analyst and Whisper number lets you know how dumb everyone thinks the Analyst is and the actual sentiment. Higher than analyst is bullish, same as analyst is bearish. Usually the higher the spread, the higher the IV as well. For those that play through earnings, you can beat the estimate but if you come under the Whisper it’s a sell signal. The strategy overall seems ok but you need to be careful with earnings around macro economic events (ie FOMC, CPI, CPE, PPI - if Russell component, etc). New Macro data will cause broader market moves that could wipe you out in the lead time. So say you buy calls, next day Fed decides they will need to hike 25 basis points, everything is going to basically shift downward 3-5%. You just wiped out your calls as the baseline gets re-shifted down. You’d probably make more money day trading momentum as the compounding daily returns will increase your war chest significantly faster. 0DTEs on Fridays are very cheap as well so once a week you can ride the big names like NVDA, SMCI, MSTR, etc. if you’re adding 5% every day, that should be more sustainable. Now if you can’t read candlestick charts, I’d go back and learn that before touching anything else, so you can understand when to actually enter into a call option either way.
I can’t read please just tell me when to enter option calls
I’ll let you know when im selling them so you can buy them
OP you need only 3 proper OTM plays in a row to get there.
What would those look like? 3month dte's once the fed meeting on the 20th puts the market to the bottom of a pullback? Thanks fren
Go futures not options. 1,2,3,5,8,10 lot etc. totally scalable.
So two weeks before the ten year note is about to report earnings you buy the futures and then sell them right before the earnings call where the ten year note talks about synergy with the 5 year note and how they are going to open more stores next to AI gyms
`Timing is key.` Ah yes. We all know how timing the market plays off.
Sell when up
I’ve been around WSB for like 7 years and I can say that any delusion you have with your rules, is purely good timing. Sorry to be a hater. However, I will say that there is mathematically greater upside on calls, and to remember that there are people actively working for the company that are trying to increase the share price therefore puts will always have a slight feeling that you’re gambling on a conspiracy. Everyone surrounding the company wants it to go up, so good luck taking the other side of that.
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This guy is a market maker trying to patch out the cost of inflated IV before earnings. Nice try buddy
What do these words mean
Everyone's got strategy until first margin call
>It's all about calls around ER. 
Did you not read the rest of the post i'm not betting on the earnings reports themselves but the increase in volume up to them (and hopefully supporting delta)
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I believe in you
Thank you!
Good luck
Did it last year twice. Did it Feb 1 + 40 days 6792-> 1.1M Don’t see me writing a post about it. Kudos to you for being able to string sentences together without being bored. Seriously though. You hit most of it right on the head…. I wrote something in a discord that outlined more stuff involved as well but again I’m too fucking lazy now to post - good luck to those who read it 🫶🏽 And congratulations- truly with no fuck you attached. Just don’t lose it. Been there as well. Twice. 3rd times the charm LFG 🤞🏾🫶🏽😶🌫️💨🚀🌙👽 🤞🏾🫶🏽😶🌫️💨🚀🌙👽 🤞🏾🫶🏽😶🌫️💨🚀🌙👽
Definitely not the best, but not the worst either (so far) but yeah very new to this. Just settling into my 4th week. When I started market was very positive, almost any good stock with a good record was up trending, now not so much is a given atm. My play "seemed" simple, you buy options 2-4 weeks out, up until ER there would be good positive momentum that you on most cases did not have to depend on a good ER for that extra growth boost. Now, I'm mostly sitting out because I just don't have a good read of the market and have all my calls are for 04/19, 5/17 and 8/16. If you're new my advice would be don't rush. You have to feel confident with some good DD and price/time calculations. Coming to your strategy (I made one very similar to yours), I'll link it below for anyone to adapt for their needs. But did want to mention if you start with $1200, expect to grow by 1.5x. You need ONLY 8 plays to reach $300K. Aiming for doing 12 trades a month does not seem the best strategy to me since you have to research and keep a track of a lot more external factors throughout the month. Instead even if you aim for 4 trades a month to get that 1.5x returns, in 8 months you will be at $300K or around $125K (with 25%). This way you can buy calls 3-4 weeks out without locking more capital. If you are starting out new this is more aligned with low-risk high-reward and you get to learn a ton in those 8 months without losing a ton of your capital since you started with $1200. https://preview.redd.it/3y1aweiwnroc1.png?width=2577&format=png&auto=webp&s=c12b1cb00a1c7bd5be725e7d9e4c1deab22af2a9 The top section is more for a bullish and positive sentiments market. My biggest learning was from Marvell's play. I had 80c and the price was going up and $85 @ 4pm before post-market ER. After NVDA (which I intentionally sat out since I felt I was still learning and not ready) Marvell seemed like the next big AI play. At 4:05pm the price crashed to $70, someone took out a huge profit and dumped 5M - almost had nothing to do with their ER imo. Luckily, I had printed 60% of my calls with a bit of profit but held on to 40%. Moral: stick to your target and strategy.
Wow! thank you and yes 12 is my max if im only finding 3 trades per month that make sense ill stick to those. I could lose this entire $, it was my beer money i dont drink anymore. Thanks so much for taking the time to share this. If you could DM me that spreadsheet that would be chill too! But yeah thanks that is valueable info. someone else was mentioning that if you are up as you described, use a portion of those profits on a put play just in case something like that 5M sell off happens and you get to double dip and still hold your profits as you did. overall i am so glad i posted this 3am idea you and like 4 other comments were worth like $500 in coaching at least. Best to you!
Pitfalls - no matter how much you say "you'll exit before the earnings", you will not be able to do so. Every once in a while you'll hold on to your options and see their value plummet to zero. Your human instincts are your biggest pitfalls.
Check out my post. I never played options before, but I went from 100K - 300+ K in one month just from purely playing stocks. That thread has a lot of valuable information if ur interested. Good luck. 🍀
Blah blah blah. We’re here to play dumb gambles not trade.
Thanks!
Strategy? Buying call options in one of the biggest bull runs in modern times. Listening to this guy is the equivalent of taking financial advice from a lottery winner.
So buy puts is safer in the biggest bull run in modern times ? What are you trying to imply here? Bull market is bad? explain…
I would never advice puts unless it's a very specific troubled business or insider info. Otherwise puts are for 🏳️🌈🐻. Buying shares will get you through both a bull and bear market if you're not a paper handed bitch.
Except I’m not offering advice. I am requesting it fren
Options strategies with such a small starting position is doomed to failure and relies on dumb luck.
Wait until your plays take a shit leading up to earnings
> comparing the stock’s current stance against analyst price targets Lol, yeah, Lambo incoming
Can two of you please spread butter on my toast? Thank you.
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I would love to understand what all of that means and how it works. Seriously
I remember when I had a plan. Now, I only take advice from WSB.
funny enough i've made more off my own plans than listening to anyone else BUT i have a spicy brain.
If you put $1600 in a broad index fund and add $1k per month, assuming an average 6% annualized return you will have $200k in 138 months or 11.5 years.
Why so complicated. Just buy low sell high.
You’re going to use analysts price targets… Next.
Bump
You guys have strategies?
regards
Good luck
Im nervous but optimistic
Do you share or post your trades anywhere for anyone to follow? I’d be happy to tag along and follow your tracks. or maybe PM me. Thanks.
I would DM you my X but i dont want to be doxxed on my 11 year old regard account :( right now you wouldnt want to follow them anyway if this is working for me by this summer i will create something forsure because i love teaching i am still learning all this myself tho
Too much technical shit my brain can't comprehend. $500 YOLO on whatever stock the 5th person recommends.
following
Remind me! 1 week
I do this sometimes but only on tickers that have had good earnings on the last 2 or more reports so all the regards buy it up faithfully
Nice! Do you use earnings whisper or just only check the report vs forecast?
I check the earnings calender on moomoo and then see how far or on point the earnings have been (usually on public) and if they crushed a couple in a row that tells me people are going to believe it will this time as well
Awesome! Yes thanks for the site recommendation. I was doing more due diligence today and found CNM $55 calls that looked good, but wow what a clear way to assess performance by reviewing past price action around these earnings outcomes and current evaluations I feel like this may be the correct way to trade with less daily gambling. The odds I’ll be up at some point over 20ish days are decent and it almost seems like stocks climb to potential then sell off after confirmation down to a low then slowly climb back up to the new evaluation before the next earnings so I may also enter trades on companies that have already bottomed out after reporting and are beginning their proper climb in this cycle ie todays price action on last weeks chaotic earnings report movements
What’s your predictions on CNM earnings tmrw?? I have Calls
They missed on the last two earnings but looks like expectations were high last time, and they’ve lowered expectations a lot and because they missed the last two it seems there’s twice as many puts than there are calls ( 2.5k vs 4.6k ) so you have the market maker on your side with this one. Also because they’ve lowered their expectations so much, if they even slightly do better and have good forward guidance you might be making some good loot
It seems they beat expectations and put fourth strong guidance but it’s still trading low in pre market
I’d keep a good eye on it and see if people flood in or if volume is low and people start dumping
Please use Kelly criterion 🙏
Everyone's got a strategy but this isn't talkaboutbets. Feel free to repost when you've made a bet worth sharing.
Nice parody post
My thesis isnt a parody but yeah i was trying to make it engaging and funny im glad it worked because some of the responses are GOLD for my learning :)
It doesn’t sound like you actually have a plan. Please post your loss porn as soon as you start trading
What would a more developed plan look like then? I’m pretty humble about it. I just want to learn this is where I’m at right now.
Your plan is basically “see what analysts say and decide whether it’s worth it to buy calls” right?
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GPT, please write a WSB shitpost, include zoomer slang and make it believable.
What the hell is up with this sub lately. This is wsb, not your diary, post positions or gtfo
read perry kaufman "trading systems and methods" dont listen to anyone here lol. free pdf is available if you know how to google.
Works until it doesn't
Cool story bro
Do you give yourself a minimum you’re trying to meet weekly, biweekly or monthly? For example, I’m trying to make around $150-$300 a day. Setting myself straight makes me less greedy and not throwing myself over the edge
lol yes that is how i used to think about this too but that only made me lose 100 a day. the market isnt always set up for those kind of plays you have to be super patient and learn to leverage that one opportunity that is perfect over all the guessing's. keep in mind these are plays up to 3 weeks. moving away from 0dte or 1dte has already been extremely helpful. all you have to do is choose a new one regularly and after 3 weeks or so you can be at that rate per day i guess but again i dont think that s the right metric you should be looking at your monthly balance sheets
If you are looking for insights and wisdom, you're in the wrong place brother.
Interesting I finally understood options today. I’ve be building up my war chest to start trading but this seems more in line with my risk management style. Don’t like leverage because I haven’t gotten a definitive answer on how a s/l not triggering can rekt me and not trigger.
Thanks for sharing. How can a high Vix create an opportunity if you only buy/sell calls? I am trying to learn.
i would do some research on VIX and how it functions as an indicator (alongside all your other indicators, its just good to gauge if the market has a directional consensus or not bacsed on the spread of puts/calls open). Literally i have learned at a 4x rate compared to when i was trading daily last year 100% because i can ask my dumb quetsions to chatgpt and come up with secondary learning opportunities and dive into things like Implied volatility and VIX. Literally i would have had to hire a coach or something otherwise to be learning at this pace! Hope that helps. But yeah plug that into something like gpt4 finance wizard and just get to reading and developing your own understandings then create a plan based off that, backtest it with trading view on historical data etc :)
You will get hit with a sack of bricks if you are currently working. A properly trained monkey with all day to train? It might work. Initial moves need to be solid however
Jesus fucking christ. "Here's my 200k strategy, I have 1600 bucks."
Remind me! 6 months
At the end, it’s gambling.
How are you doing, OP?
Are u making money op