Hey Trader,
The market throws a billion pieces of data at you. It’s like drinking from a firehose.
Right now, I’d start with earnings as the season just got underway.
You see, the report date tells you when a stock is likely to make its move. So, you know ahead of time when the opportunity to trade earnings will arrive.
A quick look at the earnings calendar shows who reports before your day begins.
I checked six days out on the S&P 500 and found 16 stocks. Goldman was on the list, reporting before the open on the 13th.
You don’t have to hunt for earnings trades the morning of. You can build them days before.
Each name gives you a choice. And options are a fantastic way to play these moves.
But, it’s not as simple as buying calls or puts.
So, let me show you how I build my list of earnings trades.
Then I’ll show you the three ways I’d play each name on it.
If You Want to Trade Earnings, Start With A Date
Every quarter, companies come in and confess their numbers. That confessional season starts in October, and we’re already in it.
A report date is the one catalyst you can circle in advance. That gives you days to plan the trade.
For you to tell me you can’t find a trade idea, you’re so full of it. Your earnings trades are already sitting on a calendar.
How I Build The List
Start your earnings trades with the stocks you already trade. Then work through it in this order:
- Pick one list you know well, like the S&P 500 or the NASDAQ 100.
- Check which names on it report over the next few days.
- Note whether each one reports before the open or after the close.
I only trade S&P 500 stocks, so I start there. About 90% of what I trade sits in the S&P.
Three days out, PepsiCo and Delta were on deck. Delta reports after the close.
Any list works. On the NASDAQ 100, Pepsi, Fastenal and ASML all had reports coming up.
Watch the timing closely. A report before the open means your position goes on the day prior.
You can trade the report whether you own the stock or not. If you don’t want to trade Delta, then don’t.
Why The Expected Move Comes First
Check the expected move before you pick a strategy. That’s the swing the options market has already priced in for the report.
The price of the at-the-money straddle gives you a quick estimate. If that straddle costs $5, the market expects roughly a $5 move either way.
Options also get pricey heading into a report. Once the numbers hit, that extra premium usually drains out fast.
Traders call that drop the volatility crush. It helps some strategies and hurts others.
I don’t know where Delta’s going after it reports. I’m not picking a side.
On earnings trades, you’re judging the size of the move.
Three Ways I’d Play Earnings Trades
Option one: buy the straddle. You buy a call and a put at the same strike and expiration.
You profit if the stock moves far enough in either direction. I call it rolling the dice.
Here’s what a long straddle gives you:
- You don’t have to guess direction, and your risk stops at what you paid.
- You’re buying when options cost the most, so the crush works against you.
- The stock has to beat the expected move, or you lose.
ASML reports on 10/13. A straddle buyer there needs a move bigger than the market priced in.
Option two: sell the straddle. You sell that same call and put instead.
You collect the premium up front. You profit if the stock barely moves.
Here’s the tradeoff with a short straddle:
- You collect the richest premium of the three, and the crush works for you.
- Your loss isn’t capped, so one big gap can do serious damage.
- Your broker will usually require significant margin to hold it.
If you think the stock’s going nowhere, sell it. Put your money where your mouth is.
Option three: use a condor. A condor makes that same quiet bet with guardrails.
The common version is the iron condor. You sell a call spread above the stock and a put spread below it.
You keep the premium if the stock stays between your short strikes. Here’s how it stacks up:
- Your maximum loss is set before you enter.
- The crush still works in your favor.
- You collect less premium than a short straddle, and four legs cost more to trade.
A simple spread works too if you’d rather keep it smaller.
Whichever you pick, build it the day before with an expiration of zero to one day. Then you’re in the trade.
Trade what’s liquid, trade what you’re comfortable with and trade what you know.
I’m not going to tell you which product to trade. I’m showing you where the ideas live.
Earnings trades sit right in front of you every season. People just scan right over them.
A calendar hands you the names and the dates. It can’t tell you which strategy fits each one.
That call needs a system. The Genesis COG System gives you a complete methodology for making it.
The Genesis Cog Scanner adds real-time signals on top. Your earnings trades then get the same disciplined check.
Goldman and ASML report next week. Build your list of earnings trades now.
Join the Genesis COG System Today
Professor Jeffrey Bierman
Creator of the Genesis COG System
