Social Media Stock Earnings Reports (How To Trade Them with Options)

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Stock earnings reports: In tonight's video, we're going to go over all the trades that we made for Thursday, July 30th. Before I do, I just wanted to show you guys a little bit about some of the stuff that I've been working on here inside of trying to do this whole new trading alert and current portfolio, and kind of a portfolio stats thing that we're going to be rolling out here in the future.

I've gone out and hired a developer to do this. It's going to be a five figure job for us to be able to get all of this integrated and make it look nice and be updated, kind of on the fly inside of the platform. One of the things I'm now going to do is start going back through a lot of the trades. 

Related "Stock Earnings Reports" Resources:

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You can see a lot of this data is just exported here from Think or Swim in our platform. Like all of the trades that we had on Facebook and when, and the closing trades, opening trades, et cetera.

We're going to be tagging everything with the directions, so now we're going to start seeing in the future when this new kind of trading alert system and platform rolls out for you guys, you're going to be able to see the direction that we're trying to go, the probability of success for the trades, our allocation.

Whether our allocation is small, medium or large, et cetera. Whether we're trading stocks, ETF's, et cetera, implied volatility percentiles for everything. It's going to be slick and very, very cool.

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Hope you guys are interested in that, and again all I'm doing right now is just going back through and populating as much possible historical data as I can. I don't think I'll be able to get everything all in one swoop, but we'll continue to go back through and populate all the data. Again, everything is going to be in there for you guys.

It'll be very, very easy and intuitive, and hopefully, make things a lot easier. I love the fact that we're going to start having a lot of portfolio stats that we can start posting, which will make it cool. If you want to see anything in particular with this as far as different numbers, please let me know.

Add it into the comment box in the trading alert page tonight, under the video. I want to make sure that I am building this thing out and trying to include as much data as we can throw into the platform. In tonight's trading alert, we have a pretty busy day. We had a lot of closing trades in earnings, so it was a nice day for earnings, which is great.

Had a string of days where we've had some trades we've moved against us, but today was pretty good. We close out everything. Profits and losses ended up being up on the day, which was nice. Went ahead and closed out Crocs earlier this morning. A nice $52 profit on this one. I'm just covering these quick.

Facebook, really good profit on Facebook. This one to me was actually kind of the big surprise. Here's Facebook. You can see implied volatility drop, which that was no surprise, but I was actually a little surprised the stock didn't move as much as it really should have given the implied volatility was up in the 100th percentile.

There you go, that's another classic example the fact that the market just overprices these moves on the average long term. Facebook was a nice win. Same thing with Wynn, W-Y-N-N. Nice big profit in Wynn.

Then in Whole Foods, we decided just to go ahead and take the small loss in Whole Foods rather than try to roll it out to the next monthly options. There wasn't anything that we ... We didn't see any technical signal or anything like that. It was just purely; you know what?

We already have enough trades on that we're kind of at risk with right now, and we're holding a lot of capital for these strangles, these earnings trades that we've rolled out. In this case, the $54 loss given all the other profitable trades for the day, really didn't phase us that much. I didn't want to go ahead and roll that one out.

You could have absolutely. I know I emailed a couple of people who wanted to do that and we worked through that through email today, but in our case, we just went ahead and bought it back for a small loss. As far as adjustment trades go, we did make two adjustments. They're both of the same veins in FXE and FXI.

All we're trying to do here is make slow, methodical adjustments to these positions. Now we've got multiple iron condors in each, and all we're doing is taking our furthest out call option on both sides, on both stocks, and rolling it closer to where the stock is trading right now.

In FXE we took our 112 call that was short, we rolled it closer down to the 108 level, took in a net credit of 68 cents. By rolling, what I'm talking about is we're buying back the 112 call, and we're reselling the 108 call. We're buying back the 112 call to close, and reselling the 108 call. That net credit is 68 cents.

That helps pad us and gives us a bigger overall credit on the entire trade. The other thing that we did in FXI is we rolled down our 46 calls, down to the 42 strike. Again, that gave us a net credit of about $44. Here you can see with FXE; this is our profit/loss diagram now kind of post roll.

Again we had that 112 call that was all the way out here, practically worthless, and so all we did is we rolled that call option closer to where the stock is trading, stock closed today at 107.29, so we're just going to the options that are just beyond where the stock is trading, just outside the money. Just taking in a bigger overall credit.

Again, that just helps reduce the overall risk on the trade. Same thing with FXI. With FXI all we did with the August position has we moved our 46 calls that were all the way out here, we started to move those into the 42 calls. This is just what we have remaining in FXI for August.

It's obviously being challenged to the downside, but we've got a lot of time still left between now and expiration, so we don't want to kind of jump the gun and bet everything that the stock is going to go lower, the ETF is going to go lower. We want to make some slow, methodical adjustments.

Again, our overall position is not too bad. We can make some adjustments in our overall position as well, but we want to do it slowly. There's still a lot of time, almost 20 days to go until expiration. There's no rush here to make adjustments that are too hasty. New earnings trades that we got into, everything looks like it should be profitable.

Everyone announced that we traded today after the market. E-X-P-E is Expedia. We sold the very wide strangle on that, the 118 calls and the 97 puts. Took in a nice big credit of $1.75. Again, EXP had really good implied volatility. Not crazy high, but it was up in the 61st percentile, and high for it's historical range.

Again, what we're trying to do is just sell options far out of the money on either end and for EXPE you can see we went all the way down to about the 15% level on each side. We're just being tested on the top side here, just a little bit. The stock is currently trading at 116 and some change after hours, but our strike price is at 118, which should be more than enough to get us outside that expected move tomorrow.

Especially given the fact that we took in a nice credit of about $1.75. Our break-even point is up closer to around 120. We should have some good movement between ourselves and the market, and ample room to take some money off the table. In DECK we decided to do the same thing. We did a nice, wide strangle in DECK.

We did the 78 calls and the 63 puts for a nice credit of 115. The same thing in DECK. If we look after hours, the stock is trading kind of a little bit right where ... A couple of dollars I think below where it closed, but you can see that our break-even points are much, much wider than where the stock is right now.

I don't think this one will be a problem at all tomorrow. Then the last one was LinkedIn. LinkedIn was obviously one of the big name ones. I'm glad we got into it. We did a very nice, wide iron condor much further than the expected move on either end. On the top side, we sold the 260, 265 call spread.

On the bottom side, the 190, 185 puts spread. Still was able to take in $1.40 credit for LinkedIn. Again, this thing had high implied volatility, but because it was a high priced stock, we weren't able to sell a naked strangle or straddle on it. The margin's just too high to be able to do that.

Even though implied volatility was high, we can still get great pricing with these iron condors. With LinkedIn, again we tried to move a little bit further outside the expected move. The stock today closed around $227. Expected move was about $25. Our beginning strike price on the bottom side at 190 is well beyond where the expected move was.

The expected move was taking the stock down to around 200 on the bottom side, and up to around 250 on the top side. Again, you can see on the top side it was expected to go around 250, and we sat our strikes just beyond that at about another $10. We gave ourselves kind of a $20 cushion on either end to let LinkedIn move a little bit more, and it sure did.

I mean it was all over the place after hours. There was trading up as high as 256, and now it's trading back down to 217. This thing has been all over the map. Who knows where it'll be tomorrow when it opens up, but right now it looks like it should be a very, very profitable trade for us again, and we should make about $140 or so on this trade.

It looks like some of these earnings trades are just starting to kind of swing our way, but again it only works out if you keep making these trades. If you stopped two days ago, you would have stopped right in the middle of making adjustments; you wouldn't have been participating in some of these trades that are now starting to make some money.

Probabilities always work out; you just have to make enough trades to be able to let that happen. As always, if you guys have any comments or questions, please add them right below. Let me know what you guys think about the new trading alert thing that we're coming out with in the new portfolio stats.

I'd be interested to get your guys' take on that and what you guys thing. Until next time, happy trading.

About The Author

Kirk Du Plessis

Kirk founded Option Alpha in early 2007 and currently serves as the Head Trader. In 2018, Option Alpha hit the Inc. 500 list at #215 as one of the fastest growing private companies in the US. Formerly an Investment Banker in the Mergers and Acquisitions Group for Deutsche Bank in New York and REIT Analyst for BB&T Capital Markets in Washington D.C., he's a Full-time Options Trader and Real Estate Investor. He's been interviewed on dozens of investing websites/podcasts and he's been seen in Barron’s Magazine, SmartMoney, and various other financial publications. Kirk currently lives in Pennsylvania (USA) with his beautiful wife and three children.