Earnings Season - Summer 2022 is finally here! Each Sunday, a list of high probability (>75% win/loss ratio over the last year) candidates will be published for the coming week. This list will be unlocked to free subscribers on Friday’s after market close.
Here are this coming week’s ER plays…
Iron Condors Candidates for Upcoming Week
MS
Entry: Wednesday, 13 June (Past performance 4 out of 4 wins), Exit: EOD on Thursday, 14 June
JPM
Entry: Thursday, 14 June (Past performance 2 out of 4 wins). I will only play as an adjustment to a butterfly of the current long call play per the trade plan. Exit: EOD on Friday, 15 June.
Directional Candidates for Upcoming Week
DHI
Entry: EOD on Thursday, June14.Jul22 Calls with approximately 30 delta, Exit: EOD Thursday, 20 June. This play is based on 4 out of 4 wins based on entering calls 7 days before ER. If DHI closes => than $77.20 on the daily before Thursday, I will enter then. Position size to $500, stop at $250.
The above are candidates for paper trades.
DO YOUR OWN DUE DILIGENCE.
Instructions for iron condors
On noted day of play at 15:41, go into TomsOptionTools or your brokers option chain for the candidate and determine the premium for the weekly straddle (call + put), rounded up to the nearest dollar. Subtract and add this amount to the current price of the candidate to obtain the short strikes. Choose one strike further (at least $1.00) in each direction for the long strikes. The candidate is valid if the total premium is a minimum of 33% ROI (=> $0.25 on $0.75 risk, $0.83 on $2.50 risk, etc…). Less is not worth it. Position size to Risk - $250 in the Options Players Swing Trading / ER Strategies Course.
For example:
The at the money straddle premium for MS on Weds EOD was $1.45 + $1.28 = $2.73. The stock price was $84.13. There for the ideal short strikes were $84.13 - $2.73 = $81 (rounded down) for puts and $84.13 + $2.73 = $87 (rounded up) for calls. Long strikes were $1.00 distant at $80 puts and $88 calls.
Total projected premium EOD for +1 x MS Apr14 $80 put / -1 x MS Apr14 $81 put / -1 x MS Apr14 $87 call / +1 x MS Apr14 $88 call was $0.29 credit on $0.71 risk for a total potential ROI of 40.84%. Position sizing for this example was 3 contracts x $71 = $210 risk. Exit is categorically EOD the following day.
Note: Candidate should be rejected if its options are illiquid (bid/ask for the short legs have > 15% slippage and/or the daily volume is < 20 contracts).