Tomorrow, Andy Crowder is unveiling his brand-new earnings season trading strategies.
Honestly, these quick trades could help you earn $1,021 EVERY WEEK during earnings season (even if you have a small account).
You’ve never seen these strategies before. And frankly, we’ve never heard of anyone else trading this way.
You’ll be among the lucky few who actually can take advantage of these earnings season trading strategies.
I sat down with Andy to chat about his new strategies. And here’s a transcript of our conversation.
Earnings Season Trading Strategies
IAN: Well, this is really exciting. Every investor knows that earnings season is a big time for stocks and the market.
As a trader, you don’t really care WHAT a company says in its quarterly financial report. Yet, you’ve found a way to trade these announcements. Tell me how you decided to start trading during earnings season.
ANDY: Earnings announcements are binary events. They are either positive or negative. Inherently, due to the uncertainty that surround each earnings event, options prices are inflated because of a spike in implied volatility. Increased volatility increases options prices, and thereby opportunities, for those of us who sell premium.
It’s all about exploiting the spike in implied volatility.
Implied volatility (IV) essentially ramps up in the near-term expiration cycle just before earnings are reported. The goal is to capture the peak in IV prior to earnings for optimal trade entry.
After earnings, implied volatility declines, in most cases, significantly. This is known as “volatility crush.” When trading options on earnings, this is a big positive. In fact, with most premium selling strategies, volatility crush is almost always desired.
IAN: Why start trading these strategies now?
ANDY: We know through extensive research that roughly 80% of the expected move around earnings is larger than the actual movement of the stock.
Simply stated, expected move is the price movement the market expects during a specified expiration cycle. Fortunately, we have tools that allow us to see, in real-time, what the expected move is for any given stock and expiration cycle. But, for the moment, we are only concerned with the expected move around an earnings announcement.
Couple the larger expected move around earnings with an inflated options price due to the uncertainty around the event and you have numerous opportunities for selling premium over the short term.
Just remember, position-size is key when trading around earnings.
IAN: Are you trying to predict WHAT is inside a company’s earnings reports? Or does that not really matter?
ANDY: It doesn’t matter at all. Again, we are trading math here. In this case, we are trading based on the expected move of the stock around earnings.
At the beginning of each week during earnings season I will send out a report. The report contains the upcoming earnings for notable, highly-liquid companies. This is the first step of our screening process.
The report also contains the implied volatility and IV rank of each highly-liquid stock.
IV rank tells us if current implied volatility is high or low in an underlying asset based on the past year of IV data. For example, if a stock has had an IV between 40 and 80 over the past year and IV is currently at 60, the stock would have an IV rank of 50%. Typically, we look for an IV rank above 50 when seeking an earnings trade.
IAN: How do you decide WHAT stocks are best to trade? How about a couple names that you’re planning to trade in the next couple weeks?
ANDY: Besides a heightened IV rank comes liquidity as seen through a tight bid/ask spread. We want to be able to get in and out of the trade with no issues . . . especially when trading around earnings.
In the coming week, I’m expecting to trade Alphabet (NASDAQ: GOOG), Amazon (NASDAQ: AMZN) and Facebook (NYSE: FB) . . . plus some other big and volatile stocks.
IAN: What types of gains could traders expect? How active do you expect to be during earnings season?
ANDY: I expect to make anywhere from 15 to 30 trades during each earnings season. I know, it’s a wide berth, but it’s hard to predict exactly how many trades I will place over a given earnings season due to a variety of factors such as liquidity, implied volatility and IV rank.
IAN: Thanks for your time today! Tomorrow’s webinar is ALMOST FULL. Go here to RSVP now – it’s FREE to attend.
It’s All About the Probabilities
Honestly, I’ve never seen anyone taking Andy’s diligent and mathematical approach to trading during earnings season.
Most folks I’ve met simply try to GUESS about whether a company will hit Wall Street expectations . . . and then they make a trade.
Anyone who has met Andy knows that he doesn’t play that game.
It’s all about the numbers . . . probabilities . . . and putting the odds in your favor.
Go here to confirm your spot in Tuesday’s Earnings Season Training #1.
This is the FIRST webinar in Andy’s three-part series.
All the webinars are FREE to attend. But you must confirm your spot in each event.