GOOG is up 2. An increase in IV should help to neutralize the negative theta and keep the floor under the strangle price. Become our next student today! Investors who anticipate trading during these times are strongly advised to use limit orders. GOOG traded 11, shares today in the pre-market hours as of AM. As an active Googlw there are a few things I look for in a broker.




There has been significant conversation on Seeking Alpha about straddles, strangles, and iron condors being used for pre-earnings announcements. Google NASDAQ: GOOG is one of the many stocks that provides good returns on these types of trades. As most people Googke there can be a significant move in a stock's price following the earnings release.

GOOG A Pre Earnings Options Trade for Google Stock best option strategies to trade a potential move are a straddle, strangle, and reverse iron condor RIC. However, a major problem is that Implied Volatility IV rises into earnings and then drops significantly afterwards. We can counteract this problem by exiting the trade right before Earninngs and making money on the rise in IV.

Creating a long straddle consists of simultaneously: Buying the ATM call Buying the ATM put Googel a long strangle consists of simultaneously: Buying an OTM call Buying an OTM put For the backtesting I choose strikes with deltas below Creating a RIC consists of simultaneously: Buying an OTM call Selling a further OTM call Buying the OTM put Selling a further OTM put For backtesting on the options being bought I choose strikes with deltas below The Gopgle below shows the backtesting data gathered from Thinkorswim's OnDemand tab in their trading platform.

Google was chosen because it can be considered the "big boy" of earnings movement and IV increase. The trades were bought 7 days before the earnings announcement at approximately AM and sold the day of the earnings announcement at approximately PM. All options were in the front month. From the results above you can see that there will be Earhings and losses, Syock overall for Google this seems to be a good system.

However, I think you can see that this is fairly consistent. The RIC is a less risky trade since the cost of the trade is less, but your return is larger with the strangle. As always with trading, it depends on the trader, their risk tolerance, and the trade Goog,e to which strategy to use. Oltions biggest risk in this type of trade is that the underlying doesn't move at all and the rise in IV is not enough to counteract the loss from theta. This is why the losses are usually kept small.

Many people wonder why they shouldn't keep these trades through earnings. The answer is because you have to purchase the options well before IV starts to rise, like maybe 7 days. Your hope is that the IV 7 days before the earnings announcement equals or is higher than after Sgock announcement. However, you loose a lot of time decay while holding those options and this means you will require a huge move to make a profit.

The reason you can't buy these positions the day before the earnings announcement is IV gets crushed afterwards because the anticipation is gone. In another Stodk of articles I will show the results of shorting a straddle, strangle, and an Iron Condor trade the afternoon before the earnings announcement and selling it the morning after, assuming an afternoon announcement. This will hopefully show Per why going against the volatility crush is a bad Earningz. Although Google would probably be the only stock I would ever consider doing it with.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. GOOG Jason Lewis There has been significant conversation on Seeking Alpha about straddles, strangles, and iron condors being used for pre-earnings announcements. Stoci a long straddle consists of simultaneously: Buying the ATM call Buying the ATM put. Creating a long strangle consists of simultaneously: Buying an OTM call Buying an OTM put For the backtesting I choose strikes with deltas below The greeks for these trades are as follows:.

Delta: Neutral you don't care which direction the Optilns moves. Theta: High you are buying options which means there is a lot of theta so this position should be held no more than a week. Gamma: Usually low but increases as stock moves. Vega: High this is where you make your money. Disagree with this article? Follow Jason Lewis and get email alerts.




Google (GOOG) After Hours Earnings Drop $58


Trade Forex, Commodities, Metals And Indices Through MetaTrader 4 And cTrader. Forex Trading with Pepperstone - Australia's Fastest Growing Forex Broker. and iron condors being used for pre - earnings announcements. Google Trading Google Options Pre - Earnings. earnings announcements. Google (NASDAQ: GOOG. Claim your online business listing. Help customers find you faster!.