Weeklies and the earnings

[ratiogreg]

Hey folks,

I am about to build my earnings watchlist and thought it would be wise to start with the tickers that can be combined with an expiration play now that there is a whole bunch of weeklies available on equity options.

Perhaps we can start an earnings thread here, if you guys want to share you experience.

I like to get in with 1/3/2 bwb or condors on tickers with overpriced volatility, at close right before the earning announcement and sell after the collapse. For instance, GOOG, AAPL, GS are usually a great candidates.

See the list of equity weeklies below, as per the CBOE link:
Available Weeklies

AAPL AIG AMZN AXP BAC BIDU BP C CAT CSCO EP F FCX FFIV GE GM GOOG GS INTC JPM LVS MCP MSFT NFLX NVDA IBM PCLN PCX PFE POT RIMM SLW SPRD SU T V WFC X XOM YHOO

Cheers,
Greg

[donpick]

I don't see RUT NDX or SPX on your list. They all have weekly options. These options qualify for special tax treatment. I believe it is the IRS 1256 rule.

[dqtmg2]

Greg,

Can you walk us through an example bwb trade over the next couple of weeks when earnings hits?

Don- RUT NDX or SPX do not have earnings.

Tim

[ratiogreg]

Straight from TOS, a list of earnings plays on expiration Friday (thursday after the close or Friday before the open). Some might overlap with the list of weeklies above. This is probably not exhaustive and you might wanna check later if the dates havent been moved. Also, some big stock that with $5 strike increments that expire on Tuesday or Wednesday can still be worth looking at.
expiration earnings.jpg
Tim- an example of 1/3/2 bwb, or ratio, from one of my old posts:

Pinning GOOG right now

Hopefully I can do the same next week, if the IV is high enough to get in with a credit, else, i'll look for a different spread. This is gonna be fun.

Don- How do you play the weekly NDX and RUT? If it is like DJX, with a friday morning settlement, then the IV wont drop completely on Thursday at close.

Greg

[ratiogreg]

Alright, so here is my GOOG play. I calculated I needed my BE to be 9 standard dev away to be safe.
Unfortunately i was in a rush to place my trade 2 min before the close and wasnt able to get a credit for this position. The worst part is that I would have picked the same strikes yesterday for a $100 credit and the day before for $200.

The stock closed a 528 or so and moved 50pts in 15min. Not sure what time the earnings are/were.
Anyways, this was a free play.
Maybe it will climb up past 590 tomorrow and make my day.GOOG july earnings.jpg

Anyone else played GOOG?

I looked at C and JPM, but the volatility was took weak.

[ratiogreg]

Actally what really sucks is that I could have used regular butterflies for the same price and lower my risk, and widen my BEs...

[ratiogreg]

It s about 11:30 and GOOG is stuck at 592.5. Not enough to take my profit. But the stock is a lunatic, so I'm gonna hang on and wait to see if it moves up a bit. In the past I ve seen it move 10pts back and forth in the few hours following the earnings. I may just end up with $0, we'll see.

I just entered into a pre earnings calendar on IBM, hoping to bank on the aug IV rise. The goal is to exit on Monday afternoon. I never did that before so it s experimental for me and if the stock behaves, i ll probably add some more before the close. But the stress test on the euro banks may move the market a bit.
Any comment on this one?

Greg

IBM pre earning double calendar.jpg

[ratiogreg]

Out of GOOG at 1:20pm as I reached my target. Looks still strong, i shouldnt look back but i cant help it...

[ratiogreg]

Got out, flat. The trade would have worked by entering and exiting at the right time of the day to navigate the volatility fluctuations. The earnings are tonight.


The best time to enter on Friday was around 2-3pm. I entered at too early and had a paper loss of about 7% at close.
The best time to exit today was at 10:30 with a 10% gain (on my suboptimal position). After this, the volatility on the front month (the weekly) rose faster than the vol on my long back month.
I'll check again before close if a far OTM credit BWB is possible.

There is a similar setting (earnings on Monday) with NFLX on the 25th. but I m not sure i can generalize the way volatility evolves pre earning.

[ANCOLL]

Straight from TOS, a list of earnings plays on expiration Friday (thursday after the close or Friday before the open). Some might overlap with the list of weeklies above. This is probably not exhaustive and you might wanna check later if the dates havent been moved. Also, some big stock that with $5 strike increments that expire on Tuesday or Wednesday can still be worth looking at.
Attachment 549
Tim- an example of 1/3/2 bwb, or ratio, from one of my old posts:
................................

All right,
thank your for your sharing and your update about this earning play,

I would like to know, where can I find the earning calendar in TOS like the one you posted?

and about trading with BWB, I give friendly advise
BE CAREFULL, coz I ever trade that with my live trading, and got MAX LOSS with google , that time the price boost up crossing my barrier on the right side.

I just dont want anyone else got loss again with BWB earning play