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I have a trade for you.
The strategy I am about to introduce has allowed us to reap 719% cumulative gains since October 2017.
Click here for details.
That’s right… 719%. And we have the track record to back it up.
You see, years ago, I never thought it made sense to trade earnings. It was a foreign concept due to numerous limitations (commissions, liquidity, no weekly expirations).
Trading earnings announcements just didn’t make sense from an efficiency standpoint.
Well, things have changed dramatically.
Because now we have the opportunity to trade earnings in a new, efficient, informed and highly-profitable manner.
Today I want to focus on the “unknown calculation” . . . which is a major advance in the way all traders approach the market, especially during earnings season.
The unknown calculation?
Expected move.
What is the “expected move”?
It’s the price movement the market expects during a given expiration cycle. It’s the key to successfully trading earnings announcements. Fortunately, now we have tools that allow us to see, in real-time, the expected move for any given underlying stock around its earnings release.
This one calculation gives us the supply and demand for any individual security in real-time. That is incredible information to have if you are trading during earnings season.
This next week, I will be sending out new potential trades.
To learn how to use this approach and to get details on those trades, please click here to reserve a spot at my upcoming briefing.
Let’s look at a ServiceNow (NOW) trade that we made.
As expected, implied volatility (IV) was high as we moved closer to the uncertainty of the earnings announcement.
We ALWAYS want to see heightened levels of IV when seeking trading opportunities around earnings. Increased levels of IV means inflated options prices . . . basically, that means we can sell options for more premium than usual.
We have several tools at our disposal to figure out what the expected move was for ServiceNow (NOW) immediately following their earnings announcement.
Knowing that expected move gave us the opportunity to utilize a variety of strategies based on our market assumptions in NOW (bullish, bearish or neutral).
I tend to stick with risk-defined, neutral-based strategies like an iron condor. This one strategy has been the leading factor in the majority of the 719% gains it has reaped since starting it 5+ years ago.
The probability of making a profit with NOW was roughly 80% on the downside and over 80% on the upside.
The increase in volatility, followed by the rapid decline, affords us the opportunity to take advantage of some nice profits as we trade earnings.
In this case, that resulted in a 21% profit.
Giving folks who followed my alerts the chance to turn a $5k trade into a $1,050 payout in just 3 hours.
I hope this short article on expected move gives you the insight you need to trade earnings and make sound judgments on each and every earnings trade you decide to take on.
If you would like to know more about the strategy, risk-management techniques and more importantly, how we have reaped over 719% since we started to trade earnings, please click here. I’ll take all of your questions during this deep-dive event (it’s free).