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Speed Retirement System

Speed Retirement System. Earnings Plays Webinar Handout July 27, 2011. One of the best ways to play an earnings announcement is to play the run up during the 10 day period before the earnings announcement. This is covered in a video in the members area.

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Speed Retirement System

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  1. Speed Retirement System Earnings Plays Webinar Handout July 27, 2011

  2. One of the best ways toplay an earnings announcementis to play the run up duringthe 10 day period beforethe earnings announcement.

  3. This is covered in a video inthe members area.

  4. I want to mention a fewother ways that you canplay an earningsannouncement.

  5. Last week, we discussed putting on a Straddleon a high flying stock.GOOG was the example.

  6. In that example, GOOG was to announce their earnings, after the market close on Thursday, July 14, 2011, which happened to bethe day before the Julymonthly option expiration.

  7. The strategy is to …Buy 1 at the money Calland Buy 1 at the money Put.This is called a straddle.A straddle is designed totake advantage ofunusual volatility.

  8. GOOG closed at $528.94 on 7/14.Buy (1) July $530 call for $12.77Buy (1) July $530 put for $14.00

  9. Daily Chart of GOOG

  10. GOOG Prices after Announcements Prior to Close:Next Morning (11am) $530 Call $12.77 $530 Call $60.20 $530 Put $14.00 $530 Put .05 $26.77 $60.20 Sale Price $60.20 Return: Cost 26.77 32.43/26.77= 125% Net Gain $33.43 Holding Period = 1 Day

  11. Let’s look at NFLX

  12. NFLX reported onMonday July 25, 2011at 4:05 est (after market close)

  13. NFLX Option Pricing Prior to Close: $281.53Next Morning (11am) $253.81 $280 Call $14.50 $280 Call $ .20 $280 Put$12.90 $280 Put 26.21 $27.40$26.41 Sale Price $26.41 Loss %: Cost 27.401/27.40 = 3.6% Net Gain $ 1.00Holding Period = 1 Day

  14. This is the Market …You will not winEVERYTIME!You didn’t think Iwould just show youjust winners?

  15. Here’s another way toPlay the announcement.Play the gap createdby the announcement.

  16. To play the gap, you willneed to look at intra-daycharts. The idea is toplay the bounce createdby an oversold condition.(Or go with the gap, if the pricedoes not trade below the gap.)

  17. If you go long on an extremegap, you can use the lowof the day as a stop.

  18. How to find the Earnings Date? http://biz.yahoo.com/research/earncal/today.html Count 10 days from today and look For high profile companies. Today is 7/27, so 10 days from today is 8/10. Let’s take a look.

  19. Look for a defined trendon the Daily Chart Check the weekly chart, to see if the weekly Is in a defined trend.

  20. Summary Three ways to play an Earnings Announcement. • The trend during the 10 day period before the announcement. The intention is to close the day before the announcement. • A Straddle on a high flying stock. • The gap after a huge move based on the earnings announcement.

  21. Thanks for watching!Speed Retirement System

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