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Earnings Play (U.S. Market) - Anyone Playing?

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hamli

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17 January 2016
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It's that time of year - earnings releases! U.S companies will be announcing their Q1 results over next few days/weeks. Anyone else play these?

I play them because they are fun - they are definitely higher variance plays. Last days to enter earnings play for some companies listed below -

Mon 18th April - NFLX, IBM, GS, HOG
Tue 19th April - YHOO, INTC, KO, EMC
Wed 20th April - NEM, FFIV, MAT, QCOM, AXP, UNP, UA
Thurs 21st April - SWN, SKX, MSFT, GOOG, CAT

I'll probably iron condor NFLX, sell a naked put & call spread on IBM, straddle GS, iron condor HOG. What's everyone else doing.
 
I have tried earnings played on several US options. Mostly strangles at 16 deltas when the IV is high enough. Looking to close it once the IV contracts.

What is your strategy when the underlying tests your strike and IV has already contracted, giving you very small value to roll the uncontested sides?
 
It's a crap shoot to keep me entertained, by no means does it make a large amount of my P&L.

If you use weekly's there is no defense, you take the loss. If you are using monthly's you have more room to move. Sure, IV has contracted, but when you are in defense mode on a strangle, that becomes less relevant. You balance or reduce your delta by closing the profitable side of the strangle and sell it closer to at the money. Because you are in defense your aiming to just break even.

Sure, I use strangles, but also use:

iron condors
naked puts
naked calls
ratio spreads
credit spreads
straddle

And combinations of them. You shouldn't be expecting that earnings will be a game changer. You should consider it as a casino where the playing field is at least even.
 
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