I would like to share my option trade ideas.
Stock Screener
The first step is to use the Stock Screener to find companies with good option volume and upcoming earnings. Here a good scan that you might like to use:
Total Options Volums greater than 5,000
Market Cap greater than 40 billion
Latest Earnings Date
This will give us companies with earnings releases this week that have good option volume. Trading stocks with good option volume is important because it will mean it is easier to get filled on trades and the bid-ask spread is likely to be lower.
The above screener gives us these results:
Now we can pick the company or companies we want to trade and decide on a strategy. Lets look at a couple of examples.
GE Bear Call Spread
Let's start with General Electric (GE) and run that through the Bear Call Spread Screener.
Let's use the first line item as an example.
Using the August 19 expiry, the trade would involve selling the 69 call and buying the 71 call. That spread could be sold for around $0.74 which means the trader would receive $74 into their account. The maximum risk is $126 for a total profit potential of 58.73% with a probability of 57%.
The breakeven price is 69.74. This can be calculated by taking the short call strike and adding the premium received.
The spread will achieve the maximum profit if GE closes below 69 on August 19, in which case the entire spread would expire worthless allowing the premium seller to keep the $74 option premium.
The maximum loss will occur if GE closes above 71 on August 19, which would see the premium seller lose $126 on the trade.
Moving down towards the bottom of the table, we see that the trades have a lower Max Profit Percentage, but a higher Probability of success. There is always a trade off with options.
Traders can also use the Iron Condor Screener if they believe the stock will stay flat, or the Bull Put Spread Screener if they have a bullish outlook.
Conclusion And Risk Management
Trading options over earnings can be risky and is not recommended for beginners. Short-term trades over earnings such as these ones are almost impossible to adjust. Either the trade works, or it doesn't so position sizing is vital. Short strangles involve naked options and should be avoided by beginner traders.
Short-term trades also have assignment risk, so traders need to be aware of that possibility.
Please remember that options are risky, and investors can lose 100% of their investment.
This article is for education purposes only and not a trade recommendation. Remember to always do your own due diligence and consult your financial advisor before making any investment decisions.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
stock touching top of the trendline at $114. looking for a break out above it. Stock has 9 and 21 EMA bull cross on daily time frame. Indicators look good. on high watch.
Give away Windills, GE's biz is immediately pristine. It is free to invest, raise divi, buy back stocks etc. etc. GE stock price should rise if they will just cut loose Windills.
Great ariticle, would you like to share it?
Great ariticle, would you like to share it?
I believe that in Q1 24 GE Aerospace and Vernova will pay a respectable dividend. The latter will provide some relief to we long, suffering holders.
The primary trend remains bullish. There is no clear indication that the upward move is coming to an end.
can GE hit $120 this year?
Great one