Chapter 9. Directional Bets: Long Calls, Bull Call Spreads, Long Puts, and Bear Put Spreads
This chapter begins our discussion of specific options trading strategies around earnings announcements. For the trades in this chapter, we assume that you’ve done your homework and have come up with directional predictions (bullish or bearish) for the market reactions to earnings surprises of particular companies you’re interested in. We discuss the basic, directional options trades that you can put on, as well as some simple variations. But we caution you: Although these positions are simple to execute, we believe they are difficult to make consistent profits because of their simple, directional nature. You must correctly predict the direction (and magnitude) ...
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