MW These are high-probability options trades for next week's busy earnings crush
By Lawrence G. McMillan
Akamai, DoorDash and Alibaba prep for massive earnings moves, while the S&P 500's failed breakouts signal a darkening technical cloud
The U.S. corporate earnings calendar is heavy next week. Options traders should pay attention to popular stocks that can be expected to have high implied volatility; that is, the market is expecting a potentially volatile move for these stocks after the earnings news.
The list below highlights stocks that are likely to see increased volatility heading into earnings. Our approach is to attempt to buy the shortest-term straddle possible (generally the one expiring on the Friday after the earnings reporting date) and to exit at the close of the first full day of trading after the earnings have been reported.
For the stocks listed here, that would mean buying the straddle expiring on Feb. 20.
Here's how to understand the columns in the table (from left to right):
Date: The earnings reporting date.
PM?: Whether the earnings are to be reported before the market opens ("N") or after the market closes ("Y").
Symbol: The stock symbol.
Needed: The most that we would pay for a near-term straddle, with the price of the straddle expressed as a percentage of the underlying stock price. This percentage move should be less than six of the past 10 postearnings moves in this stock.
Optvol: The 20-day average of total option volume on this stock. Low numbers here indicate a potentially illiquid situation.
Note that the earnings reporting date for Alibaba Group (BABA) is only an estimate ("EST" is noted at the end of that row of data). So, before acting on that, you'll need to verify the earnings reporting date.
Date PM? Symbol Needed Optvol 2/17/2026 N MDT 2.95% 7510 2/17/2026 Y PANW 5.41% 32845 2/18/2026 Y CVNA 13.80% 58960 2/18/2026 Y DASH 7.44% 7783 2/18/2026 Y EBAY 7.88% 8084 2/19/2026 N BABA 5.86% 189955 EST 2/19/2026 N DE 5.22% 2585 2/19/2026 N ETSY 7.64% 8807 2/19/2026 N LMND 21.56% 12469 2/19/2026 N WMT 4.49% 112040 2/19/2026 Y AKAM 10.75% 3780 Data as of 2/11/26
It is often the case that straddles become cheaper as the actual reporting date approaches, so these are all worth monitoring.
New recommendation: NatWest Group (NWG)
This is a modestly volatile stock, whose longer-term options are trading at a very reasonable price. In fact, the straddle or strangle buy here is worth looking at. NatWest Group's stock (NWG) is trading between the $15 and $17.50 strikes. So, if one were to buy both the NWG (Aug. 21) 15 put and the NWG (Aug. 21) 17.5 call, that is what's known as a strangle buy. Currently, that strangle can be bought for roughly an implied volatility of around 30%. That is well below the realized volatility that NWG normally displays - usually somewhere between 35% and 43%. Hence the strangle is "cheap" statistically.
Buy 3 NWG (Aug. 21) 17.5 calls and buy 3 NWG (Aug. 21) 15 puts for a combined price of 2.20 or less per strangle (one of each).
At this price, the position will profit if NWG falls below $12.80 or rises above $19.70 prior to the options' expiration.
Moreover, if NWG trades at $12.50, then roll the puts down to the 12.50 strike. Similarly, if NWG trades up to $20, then roll the calls up to the 20 strike.
Why failed S&P 500 breakouts have become troubling
The Dow Jones Industrial Average DJIA has hit all-time highs but the other major indices haven't followed (yet). The S&P 500 SPX continues to explore the upper end of its trading range but hasn't been able to break 7,000 convincingly. This is a problem. A year ago, a similar situation ultimately led to a sharp U.S. market decline in March and April.
There is support at 6,800 and 6,720. If SPX trades below 6,720, it would be a highly negative development.
Equity-only put-call ratios remain on sell signals, as they are rising (see charts). That is bearish for stocks.
Some market internals have improved. For example, market breadth has been generally positive. The cumulative total of breadth - the cumulative advance-decline line - has been making all-time highs this past week, both in terms of NYSE data and in terms of "stocks only" data (i.e., data over all optionable stocks). When cumulative breadth is making all-time highs, SPX typically does too.
New 52-week highs on the NYSE continue to absolutely dominate new lows, so this indicator remains bullish as well.
So, most of the market indicators are bullish, but unless SPX can break out over 7,000 and push quickly higher, it won't mean much. We will continue to take new positions in line with confirmed signals, such as the new "spike peak" buy signal.
New recommendation: 'Spike peak" buy signal
VIX VIX spiked last week, reaching 23.10 on Feb. 5, as the market suddenly displayed some fear. But that was short-lived and VIX slid back to 18. That action created a "spike peak" on the accompanying VIX chart, and it is a new "spike peak" buy signal for the stock market.
This new buy signal will remain in effect for 22 trading days, unless it is stopped out by VIX rising above that previous peak at 23.10. (VIX rose to 20.85 on Thursday.) The signal is marked with a green "B" on the VIX chart below.
The VIX chart also shows spike-peak trades over the past year. A red "B" indicates a successful trade, while a blue "B" indicates an unsuccessful one. The system's long-term track record is quite strong. The construct of volatility derivatives remains bullish for stocks as well.
Buy 1 SPY (March 20) at-the-money call and Sell 1 SPY (March 20) call with a striking price 20 points higher.
The trading system that we have built around these spike peaks calls for holding the position for 22 trading days (about a month), but it would be stopped out if VIX were to close above 23.10 - its most recent peak.
Follow-up action
All stops are mental closing stops unless otherwise noted.
We are using a standard rolling procedure for our SPY SPY spreads: In any vertical bull or bear spread, if the underlying hits the short strike, then roll the entire spread. That would be roll up in the case of a call bull spread or roll down in the case of a bear put spread. Stay in the same expiration and keep the distance between the strikes the same unless otherwise instructed.
Also, for outright long options, roll if they become 8 points in-the-money.
Long 1 TSEM (Feb. 20) 140 call and short 1 TSEM (Feb. 20) 155 call: Continue to hold without a stop for now. The stock dropped precipitously on Feb. 4, but announced positive news on Feb. 5. If TSEM $(TSEM)$ trades at $155, sell this spread and buy the TSEM (Mar. 20) 155-170 call bull-spread.
Long 1 BMO (Jun. 18) 130 call and long 1 BMO (Jun. 18) 130 put: Continue to hold this straddle. Roll the calls up if BMO $(BMO)$ trades at $150 and roll the puts down if it trades at $110.
Long 6 AAL (Feb. 20) 15 puts: We will continue to hold as long as the AAL $(AAL)$ put-call ratio is on this sell signal.
Long 1 SPYM (Feb. 20) 81 call and long 1 SPYM (Feb. 20) 81 put: Roll the calls up to the 84 strike if SPYM SPYM trades at $84 or higher. Roll the puts down to the 78 strike if SPYM trades at $78 or lower.
Long 1 LH (Feb. 20) 280 call: We will hold the call as long as the put-call ratio for LH $(LH)$ remains on a buy signal.
Long 3 ERAS (Feb. 20) 7.5 calls: Raise the closing stop for ERAS $(ERAS)$ to 10.10.
Long 1 SPY (Feb. 27) 688 call and short 1 SPY (Feb. 27) 708 call: This is the position that was based on the "spike peak" buy signal of Jan. 21. The position was stopped out at the close of trading on Feb. 5, since VIX had risen more than 3.0 points, but a new "spike peak" buy signal is now in effect. Hold this position in line with the new "spike peak" buy signal of Feb. 6.
Long 1 SPY (Mar. 20) 692 put and short 1 SPY (Mar. 20) 652 put: This is the position based on the recent breadth-oscillator sell signal. Market breadth has improved, so this position should be closed.
All stops are mental closing stops unless otherwise noted.
Send questions to: lmcmillan@optionstrategist.com
Lawrence G. McMillan is president of McMillan Analysis, a registered investment and commodity trading advisor. McMillan may hold positions in securities recommended in this report, both personally and in client accounts. He is an experienced trader and money manager and is the author of "Options as a Strategic Investment." www.optionstrategist.com
Disclaimer:
(c)McMillan Analysis Corporation is registered with the SEC as an investment advisor and with the CFTC as a commodity trading advisor. The information in this newsletter has been carefully compiled from sources believed to be reliable, but accuracy and completeness are not guaranteed. The officers or directors of McMillan Analysis Corporation, or accounts managed by such persons may have positions in the securities recommended in the advisory.
-Lawrence G. McMillan
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February 12, 2026 17:38 ET (22:38 GMT)
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