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We are flying in this season’s ER plays. The past week, whose plays were announced to premium subscribers in last post (Recap of Earnings Season Week 3) started off with one loss, but finished strong with wins on the rest. Here is a summary:
DDOG
DDOG has often shown up on my play list. But I usually am not able to get a fill - this time I did. ER was after market close on Wednesday, May 3rd. Implied volatility was sky high at an average of 160% setting up a nice and wide $58/59/73/74 iron condor (May05 expiry) for a $33 credit on $67 risk per contract. To stay within the systems earnings risk management profile, only 3 contracts were possible. The day following earnings, DDOG shot up 14.52% but implied volatility had a massive crush. I bought back the call side for a loss and held the way out of the money puts until expiry. Total loss on this one was $123.
ETSY
ETSY’s ER was after market close on Wednesday, May 3rd. I love playing this name as there is always a massive implied volatility crush - this time went from an average of 187 to 100% and the movement post ER was well within the wings, $87/88/110/111. Total profit on exit near close on Thursday was $220.
Pre-ER
Post ER:
QCOM
QCOM is one of my favorite stocks for trading options - Iron Condors for ER and Gamma Scalping between ER’s. (Gamma Scalping will be a subject of this blog in June.) QCOM ER was after market close on Wednesday, May 3rd. Implied volatility was above 200% setting up a nice and wide $104/105/120/120 iron condor (May05 expiry) for a $38 credit on $62 risk per contract. To stay within the systems earnings risk management profile, 4 contracts were possible. The day following earnings, QCOM dumped but recovered to stay within the IC wings. But implied volatility had a massive crush. I exited the trade for a $72 profit.
MRNA
MRNA reported earnings before market open on Thursday, May 4th. A $120/121/139/140 iron condor (May05 expiry) for a $38 credit on $62 risk per contract. To stay within the systems earnings risk management profile, 4 contracts were possible. The day following earnings, MRNA moved just over 3% but stayed within the IC wings. IV crushed and the Iron Condor was bought back at close. Realized profit was $175.
SQ
SQ reported earnings after market close on Thursday, May 4th. A $54/55/66/67 iron condor (May05 expiry) for a $34 credit on $66 risk per contract. To stay within the systems earnings risk management profile, 3 contracts were possible. The day following earnings (Friday), SQ moved less than 2% but stayed within the IC wings. The Iron Condor expired worthless and $102 profit was realized.
Note: All ER trade planning and risk graphs are courtesy of TomsOptionTools. This software is electronic gold!
As mentioned, this was a good week. Total net profit was $502.
For premium subscribers, here are next week’s planned plays, all of which have a historical 75% win/loss ratio or better:
PYPL (Past performance 4 wins out of last 4 ER’s)
ER is scheduled after market close on Monday, May 8th. Earnings Iron Condor to be entered within 15 minutes of close on Monday and exited within the last 15 minutes of close on Tuesday.
WYNN (Past performance 3 wins out of last 4 ER’s)
ER is scheduled after market close on Tuesday, May 9th. Earnings Iron Condor to be entered within 15 minutes of close on Tuesday and exited within the last 15 minutes of close on Wednesday.
OXY (Past performance 3 wins out of last 4 ER’s)
ER is scheduled after market close on Tuesday, May 9th. Earnings Iron Condor to be entered within 15 minutes of close on Tuesday and exited within the last 15 minutes of close on Wednesday.
TWLO (Past performance 3 wins out of last 4 ER’s)
ER is scheduled after market close on Tuesday, May 9th. Earnings Iron Condor to be entered within 15 minutes of close on Tuesday and exited within the last 15 minutes of close on Wednesday.
DIS (Past performance 3 wins out of last 4 ER’s)
ER is scheduled after market close on Wednesday, May 10th. Earnings Iron Condor to be entered within 15 minutes of close on Wednesday and exited within the last 15 minutes of close on Thursday.
Alternate DIS earnings play: Out of the money call butterfly with +1 x long $104 call, -2 x short $109 calls, and +1 x long $114 calls. This will be low cost at between $65 and $75 per contract. If DIS moves up 5% or more, IV will crush and the butterfly will achieve over 100% ROI. On the other hand, if DIS doesn’t move or declines, this would be a full loss. I will only do the alternate if the first four plays of the week are successful.
Please do your own due diligence!!