OPTIONS TRADING - PUTS & CALLS

[deafcone]

excellent post. I took the BetterTrades Workshop and this was a big topic there. The called them Chicken Trades but they're the same thing as straddles.

I will go over my CD's this weekend and refresh the criteria for a good straddle trade (chicken trade). I do know 3 stocks off the top of my head that are excellent for it.

AAPL
FSLR
ISRG

You'll use their earning reports and buy a put and call about the same price away from the strike price the day before or of their earnings report. You'd want a stock who's earning report comes out usually after hours, more dramatic reaction to the news that way. There are criteria such as percent of surprise from the report, consistant overreaction from several previous reports,etc that matter in it working.
I didn't buy the bettertrades system that would automatically do that for you but I did find free links to each criteria you can find the data yourself and I will post those links also. I have them all bookmarked.

Once you have your puts and calls bought you ait and when the market opens the next day it should have a dramatic reaction to the report and make a minimum move of at least 4 dollars in one direction or the other.
you'll wait until you feel the move is done, it might be one day it might be a few days but when you feel it has gone up or down and might be done with it's move you'll exit the profitable position and stay in the losing position. Reason to stay in the losing position is becaus when a big move like that happens you can pretty much bet there is going to be a crrection and then you watch to determine when to exit while you gain some or all of your losing position back.

Will post criteria sometime this weekend. It iwll b based on what Bettertrades tought me.


DC