Earnings Options Checklist: Enter Late, Stay Neutral
The earnings checklist, from expected move to a neutral entry ten minutes before the close
The trade most people get backwards
Most traders enter earnings trades in the morning and pick a direction. I do neither, and this clip from a live Elite Trader call walks through the checklist I run instead.
Expected move against history
The first check compares what the options market prices for the move with what the stock actually did on its last earnings dates. When the priced move is larger than the typical realised move, selling premium has an edge. When history shows bigger jumps than the market expects, I stay away.
Volatility crush and the straddle
The second check estimates how far implied volatility drops once the numbers are out, because that drop is where a neutral trade earns most of its money. The at-the-money straddle gives a quick second opinion on the expected move, and if the two readings disagree, the checklist stops there.
Ten minutes before the close
The entry itself goes in late in the session, neutral in delta. By then the day's move is done, spreads are tight and the fills are fair. The clip shows the whole sequence on a live name, with the numbers as they came up in the call.
Every Wednesday we run a session like this on a real portfolio. One free lesson a week lands here; the full calls and the archive are part of the Elite Trader Plan.
Education only. Nothing on MacroDozer or The Desk is investment advice.