Prepare for a Post Earnings Premium Crush (PEPC)

Prepare for a Post Earnings Premium Crush (PEPC)

Posted On April 9, 2019 12:59 pm

Earnings season officially kicks on Friday off with big banks such JP Morgan (JPM)Citigroup Inc.(C) and Wells Fargo (WFC), and then tech will start to join the parade with Netflix (NFLX) reporting after the close on Monday.

For some active traders, these jolts of information and the accompanying stock price movement, represent terrific short-term money-making opportunities.  And many will try to juice the returns by using options.

Before getting to some of the concepts and strategies that can be employed in playing earnings reports, let me provide the caveat that all earnings plays are extremely speculative and should only involve a minimal allocation of risk capital.   The challenge trading earnings is that there are many variables that need to be accounted for and correctly forecasted.

Not only must you…

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About author

Steve Smith

Steve Smith have been involved in all facets of the investment industry in a variety of roles ranging from speculator, educator, manager and advisor. This has taken him from the trading floors of Chicago to hedge funds on Wall Street to the world online. From 1987 to 1996, he served as a market maker at the Chicago Board of Options Exchange (CBOE) and Chicago Board of Trade (CBOT). From 1997 to 2007, he was a Senior Columnist and Managing Editor for TheStreet.com, handling their Option Alert and Short Report newsletters. The Option Alert was awarded the MIN “best business newsletter” in 2006. From 2009 to 2013, Smith was a Senior Columnist and Managing Editor for Minyanville’s OptionSmith newsletter, as well as a Risk Manager Consultant for New Vernon Capital LLC. Smith acted as an advisor to build models and option strategies to reduce portfolio exposure and enhance returns for the four main funds. Since 2015, he has worked for Adam Mesh Trading Group. There, he has managed Options360 and Earning 360, been co-leader of Option Academy, and contributed to The Option Specialist website.