Q&A
What's actually happening in a stocks option markets in the 24 hours before earnings? Who's doing what and why does implied volatility behave the way it does?
In the 24 hours before earnings, there is uncertainty leading to people buying cheaper options to protect their positions, which holds volatility up. It's rare for volatility to implode before earnings. Market makers and risk teams manage their positions, and there's a tug-of-war between those selling premium and those buying premium. The outcome depends on market forces and no one knows if volatility will expand or contract.
View full notes
Actionable takeawayVolatility tends to stay elevated before earnings due to uncertainty and positioning by market participants, with no clear prediction on whether it will expand or contract.
Q&A
Will Apple beat revenue estimates in its earnings report this week?
The speaker believes there's an 80% chance Apple will beat estimates, but the stock's direction is 50/50.
View full notes
Actionable takeawayApple has a high probability of beating revenue estimates, but the stock's direction is uncertain.
Q&A
Who does PayPal?
PayPal does have earnings.
View full notes
Actionable takeawayPayPal has earnings reports that can impact its stock price.
Q&A
What do you think about SpaceX earnings? Do you keep your short puts or do you make adjustments?
The speaker keeps their short puts and does not make adjustments.
View full notes
Actionable takeawayMaintain short puts without adjustments during earnings.
Q&A
What does the divergence tell you and does it change how you would trade any of them from here?
The divergence indicates that the market may not be reacting to earnings as expected, and it may affect trading strategies.
View full notes
Actionable takeawayThe divergence may indicate a need to adjust trading strategies based on market reactions to earnings.
Q&A
What is the expected move for HOOD after earnings?
The expected move for HOOD after earnings is 8 bucks, based on the current price of $87. The speaker is short a bunch of puts and is fingers crossed for the outcome.
View full notes
Actionable takeawayThe expected move for HOOD after earnings is 8 bucks, with the speaker shorting puts based on this expectation.
Q&A
What is the expected move for Coinbase on its earnings report?
The speaker expects Coinbase to move by approximately $1175, with a potential drop of $20 on earnings.
View full notes
Actionable takeawayTraders should consider the potential for a significant move in Coinbase following its earnings report.
Q&A
What is the expected move for Micron (MU) based on the earnings trade?
The speaker expects a move of around 10 to 12%, with the strike prices adjusted to reflect this. The expected move is based on the current volatility and the potential for a positive earnings report.
View full notes
Actionable takeawayThe expected move for Micron (MU) is around 10 to 12%, with the strike prices adjusted to reflect this. The trade is based on the expectation that the stock will move up by the expected amount.
Q&A
Are you going to tilt these earnings to the downside? Are you going to play them? Are you going to not participate?
The speaker is considering participating in the earnings-driven market movement, but is hesitant due to the potential risks. They acknowledge that selling puts on earnings reports has not worked so far and are reluctant to sell calls due to their existing short position.
View full notes
Actionable takeawayThe speaker is evaluating whether to participate in earnings-driven trades, but is cautious due to the risks involved.
Q&A
Do actual earnings matter to traders?
Earnings results matter to traders if they have a position, but traders often care more about the event itself and the volatility it brings. Earnings results are not always directly correlated with stock price movements due to market expectations and pricing.
View full notes
Actionable takeawayTraders should focus on the event and volatility rather than the actual earnings results, as market reactions can be unpredictable.
Q&A
Should I hold through earnings or roll and roll the dice holding through August?
The speaker suggests that it's a 50/50 shot, and the trade could be left on, rolled up and out, or covered depending on the trader's strategy.
View full notes
Actionable takeawayThe speaker advises considering multiple strategies, such as leaving the trade on, rolling it up and out, or covering it, depending on the trader's risk tolerance and market outlook.
Q&A
When are Meta's earnings?
The speaker is unsure of the exact date of Meta's earnings and suggests avoiding buying premium due to expensive implied volatility. They recommend alternative strategies like call spreads or broken wing butterflies.
View full notes
Actionable takeawayAvoid buying premium before earnings if implied volatility is high; consider alternative strategies like call spreads or broken wing butterflies.
Q&A
What do you think about SpaceX earnings next week? Are you going to roll your position?
The speaker plans to roll their SpaceX position this Friday to September and may reenter or roll again. They believe earnings won't significantly impact the stock, given the price drop from the IPO.
View full notes
Actionable takeawayThe speaker is rolling their position and does not expect earnings to have a significant impact.
Q&A
Are you doing anything in Apple for earnings?
The speaker has no Apple position currently and plans to do something in Apple, likely related to earnings, which are expected tomorrow.
View full notes
Actionable takeawayThe speaker is considering a trade in Apple ahead of its earnings, which are scheduled for tomorrow.
Q&A
What are you guys going to do for Nvidia earnings?
The speaker mentioned selling futures ahead of the earnings announcement, anticipating a negative market reaction. The trade was executed as a short position on futures, with the expectation that the earnings would lead to a decline in the stock price. The speaker noted that the trade was not successful, indicating that the market reaction did not align with the initial thesis.
View full notes
Actionable takeawayAnticipating negative market reactions to earnings announcements can lead to short-term trading opportunities, but the success of such strategies depends on accurate market sentiment and timing.
Q&A
Any trades for earnings tomorrow for the banks?
The speaker mentioned that they will discuss it later, indicating that they are not providing a specific recommendation at the moment.
View full notes
Actionable takeawayThe speaker is not providing a specific recommendation for earnings-related trades on the banks, suggesting that further analysis or discussion is needed.
Q&A
What option strategies are suitable for playing earnings?
The speaker suggests selling puts or put spreads as suitable strategies for playing earnings, leaning bullish or omnishirectional. This approach is suitable when volatility is cheap, and the stock feels like it's trading cheap, even if it's not technically cheap.
View full notes
Actionable takeawaySelling puts or put spreads can be a viable strategy for earnings, especially when volatility is cheap and the stock feels undervalued.
Q&A
Do earnings reports significantly affect market prices?
The speaker states that earnings reports do not significantly affect market prices, as evidenced by the lack of reaction to poor Tesla and IBM earnings. This suggests that market movements are influenced by other factors beyond individual earnings reports.
View full notes
Actionable takeawayEarnings reports may not always have a direct impact on market prices, and traders should consider other factors when making decisions.