2. Option Strategies for Earnings Announcements: An Overview
Earnings announcements often trigger large market reactions, which is ideal for many types of short-term trades. Moreover, detectable patterns in options’ implied volatility and stock prices before and after earnings announcements suggest further trading opportunities. This chapter discusses the advantages of trading options instead of cash stocks around earnings announcements, reviews the basics of options trading, and introduces option strategies designed to exploit several aspects of earnings announcements.
Why Options?
When faced with the opportunity to make a trade based on earnings news, why should you consider using options instead of plain vanilla stocks? After all, many investors ...
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