Earnings Strategies: Why Buying the Straddle Doesn't Work

https://www.tastytrade.com/tt/ Tastytrade's Tom Sosnoff and Tony Battista look to finally put this idea of buying strangles and straddles around earnings to rest. The two go through a study that explains why buying an ATM straddle or a 1 standard deviation OTM strangle two weeks prior to earnings, in order to take advantage of the gamma decay, does not work. ======== 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://goo.gl/Szl24S Watch tastytrade LIVE daily Monday-Friday 7am-3pmCT: http://goo.gl/EaF69C Download our mobile app, Bob the Trader: http://goo.gl/zgIyco Follow tastytrade on Twitter: https://twitter.com/tastytrade Become a fan of tastytrade on Facebook: https://www.facebook.com/tastytrade Follow tastytrade on LinkedIn: http://www.linkedin.com/company/tastytrade Follow tastytrade on Instagram: http://instagram.com/tastytrade Follow tastytrade on Pinterest: http://www.pinterest.com/tastytrade/

Comments

1. LOL http://www.theoptionsguide.com/buying-straddles-into-earnings.aspx
2. +tastytrade  Are you talking about selling a straddle or buying a straddle?  It sounds like you are talking about selling a straddle but the title is a bit confusing.
3. There's better stocks to put straddles on.....Not the "big boys" as you say
4. Please get Kim Klaiman from SteadyOptions on the show to talk more about this strategy.  It's a consistent strategy that is profitable, they backtest before entering straddles and calendars.  The examples referenced in the video aren't representative of the strategy.
5. Another interesting study as you all continue to be a great resource for options traders. It makes perfect sense though. An OTM straddle would lose value if it closed ATM before earnings. I think another interesting study would be purchasing ATM straddles two weeks out (without foresight of the pre-earnings close) just to see if there's a play in that scenario (profiting from the IV increase). Would love to see that research. Thanks for the video.
6. Thanks for the info very valuable. I listen to your videos everyday religiously.