Buying Options Going Into Earnings | Should You Do It?

Key points to remember about expected move and earnings announcements to improve your trade selection and probability of profit. See more videos from the Market Measures Series: http://ow.ly/PXBOu It is hard to determine expected moves going into earnings. Some assume buying call options ahead of earnings reports will give them an edge due to speculation in the market, assuming they can ride the volatility increase. In this segment the tastytrade research team examines this theory to see if an increase in volatility correlated to an increase in options prices with a binary event like earnings. The study observed the expected move during the 5 days prior to the earnings announcement for DAL, GOOG, GS, NFLX. Watch this segment of “Market Measures” with Tom Sosnoff and Tony Battista to see the results of the study and hear the insight from Tom and Tony. It's not always easy to take the measure of a market, whether you've been trading for a day or a decade. On this segment we look under the hood—options probabilities, volatility, trading strategies, futures, you name it—so your trading mechanics are built to manage more winners. You can watch a new Market Measures episode live and check out all previous episodes everyday at http://ow.ly/EoyGW! ======== tastytrade.com ======== Finally a financial network for traders, built by traders. Hosted by Tom Sosnoff and Tony Battista tastytrade is a real financial network with 8 hours of live programming five days a week during market hours. Tune in and learn how to trade options successfully and make the most of your investments! http://goo.gl/EaF69C Subscribe to our YouTube channel: http://ow.ly/EbyTn Watch tastytrade LIVE daily Monday-Friday 7am-3:15pmCT: http://ow.ly/EbzUU Download our mobile app, Bob the Trader: http://goo.gl/zgIyco Follow tastytrade: Twitter: https://twitter.com/tastytrade Facebook: https://www.facebook.com/tastytrade LinkedIn: http://www.linkedin.com/company/tastytrade Instagram: http://instagram.com/tastytrade Pinterest: http://www.pinterest.com/tastytrade/

Comments

1. sorry guys this is called confirmation bias. immediately you're doing a straddle you playing it wrong never mind the timings with theta decay. sorry guys you're approaching entirely incorrectly
2. Wonderful video! I had read many articles that said a trader may take advantage of high volatility leading to earnings. I monitored volatility during earnings two seasons ago and picked on liquid stocks, stocks with relatively high volatility compared to the rest, covering medium to large caps.The stocks I picked included FANGS. I found out the hard way that there is hardly any advantage. I am glad to come across your video that agrees with my findings. I wish I had found your video earlier. Will check on your other videos. I agree that it is the newsletter writers and chart rooms who benefit from such articles not traders or investors. The newsletters and chart rooms circulate other incorrect information all over again and again. Thank you for sharing such important information.
3. Excellent. Are the Straddle prices consistently following the same strike price of the first day, or are you taking each day's straddle ATM in the new prices?
4. Hey guys, just quick question. What expiration month for at the money straddle are you using in your expected move formula. Thanks
5. Regardless of the theoretical victory of this strategy, The sudden spike in IV is what makes the stock price suddenly drop?
6. This didn't make sense to me. If bought GS 205 straddle on 7/09, then it would be worth round $8 at exp, making at least 86 cents. If bought DAL 40 straddle on 7/8, would be worth at least 3.66 at exp, this time making over $1. If bought GOOG 530 straddle on 7/10, would be worth 29.85 at exp, again making money. It seems to me that if you buy going into earnings week, you may have a shot at making money.  What am I missing?
7. Fascinating. Thanks for the vid.
8. where can i find stock IV in the certain month? thank you
9. excellent work guys. this video would've saved me tons of money if only a week earlier. anyway, I paid my tuition and learned the hard way. so, is it better to sell premium into earnings?