Volatile Earnings History Draws Options Traders to Seagate Technology Stock

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All Results Presented are Hypothetical for educational purposes only and do not include slippage or commissions There is a substantial risk of trading options earnings announcements history in trading financial instruments of any kind including stocks, futures and options.

Clients should consider all relevant risk factors, including their own personal financial situation, before trading. Don't trade with money you can't afford to lose. Past performance is not indicative of future results. You're The Options Expert. Interested in learning more about Earnings Plays? Contact your Product Representative Today! In this video Len Yates introduces the Earnings Plays and shows how easy it is to track trading opportunities and exactly what action to take, including when to get in and out of the trade.

James demonstrates how to use the Earnings Trading options earnings announcements history module. He goes over the five categories of Earnings Plays, how to place the trades, and shares valuable tips learned from his experience trading them in the real world.

The five strategies covered by the new Earnings Plays module are: Stocks that make big moves - options tend to be under valued. Stocks that make smaller-than-expected movesoptions tend to be over valued. Two stocks in the same industry, only one of which is announcing earnings.

Echoes - Two stocks in the same industry, with o ne announcing days after the other. Runners - Stocks that tend to "run" in price after the earnings announcement. This system is based on the hypothetical results actual trades would have experienced in trading options earnings announcements history past and shows you a quality ranking for each trade along with its past success rate.

Detailed instructions tell you exactly when to open and close each trade based on past historical performance of those trades. Each week sophisticated search algorithms are performed in the servers which produce the all-important stock lists.

These lists can then be imported automatically into trading options earnings announcements history OptionVue program based on the filter settings you choose for qualifying candidates. Earnings Plays is NOT a trading system!

It is designed to present you with a list of potential trades every week for you to look at. This not only saves you a lot of time, but also notifies you of potential earnings related trades you might otherwise miss. Still, we always get the question: What if I blindly and mechanically do every trade as if I I were a complete idiot with no understanding of how to trade options?

We do place the recommended trades to see how they do and the results are encouraging. Each quarter is a bit different, and the most profitable strategy in one quarter might not be profitable in the next.

By the same token, one that underperformed last quarter might give you spectacular gains this quarter. Below is a detailed breakdown for the 4th quarter. Results from Earnings Season for Fourth Quarter There were a total of 91 recommended trades in all five categories combined.

You choose the quality settings used, and of course pick and choose trades you want to place, or simply focus on one or more of the possible strategies. It is not unusual for the price of a stock to rise or fall significantly after an earnings report. This potential for a stock to move in response to an earnings report creates trading opportunities.

Making trades based around the earnings announcements of stocks is nothing new - but now OptionVue introduces a trading options earnings announcements history set of tools for trading options around earnings plays.

There are five different kinds of earnings trading options earnings announcements history that are tracked by Optionvue — two that most people are familiar with and three that are completely new. Lists of stocks that are exceptional plays are brought directly into the OptionVue Quotes Display, where you can manage them and sort them in different ways.

The program includes a new "weekly planner" that shows every trade that needs to be placed in the coming week, as well as in further weeks.

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Publicly traded companies in North America generally are required to release earnings on a quarterly basis. These announcements, which contain a host of relevant statistics, including revenue and margin data, and often projections about the company's future profitability, have the potential to cause a significant move in the market price of the company's shares.

From an options trading viewpoint, anything with the potential to cause volatility in a stock affects the pricing of its options. Earnings releases are no exceptions. Options traders often try to anticipate the market's reaction to earnings news. They know implied volatilities, the key to options prices, will steadily rise while skew - the difference in implied volatility between at-money and out-of-the-money options - will steadily steepen as the earnings date approaches.

The degree by which those adjustments occur is often based on history. Stocks that have historically made significant post-earnings moves often have more expensive options. Earnings risk is idiosyncratic, meaning that it is usually stock specific and not easily hedged against an index or a similar company. Stocks that are normally quite well correlated may react quite differently, leading to share prices that diverge or indices with dampened moves.

For those reasons, there is no single strategy that works for trading options in these situations. Traders must have very clear expectations for a stock's potential move, and then decide which combination of options will likely lead to the most profitable results if the trader is correct.

If the market seems too sanguine about a company's earnings prospects, it is fairly simple though often costly to buy a straddle or an out-of the-money put and hope for a big move. Taking advantage of the opposite prospect, when front month implied volatilities seem too high, can also be profitable but it can also cause serious losses to be short naked options in the face of a big upward stock move.

Traders can take advantage of high front month volatility by buying a calendar spread - selling a front month put and buying the same strike in the following month. The maximum profit potential is reached if the stock trades at the strike price, with the front-month option decaying far faster than the more expensive longer-term option.

Losses are limited to the initial trade price. Sometimes excessive fear is expressed by extremely steep skew, when out-of-the-money puts display increasingly higher implied volatilities than at-money options. Traders who use vertical spreads can capitalize on this phenomenon. Those who are bearish can buy an at-money put while selling an out-of-the-money put. This allows the purchaser to defray some of the cost of a high priced option, though it caps the trade's profits if the stock declines below the lower strike.

On the other hand, those who believe the market is excessively bearish can sell an out-of-the-money put while buying an even lower strike put. Although the trader is buying the higher volatility option, it allows him to make money as long as the stock stays above the higher strike price, while capping his loss at the difference between the two strikes.

This article is provided for information only and is not intended as a recommendation or a solicitation to buy or sell securities. Option trading can involve significant risk. Before trading options read the " Characteristics and Risks of Standardized Options. What is the margin on a Butterfly option strategy?