XMSR..which was a few days play was also straddled last night and this one like ERES before it, the straddle was cheap but cycle III (the gap play or play after earnings) is where the profit lies. Shorting spike highs and helping the puts along a bit. Its very important not to just call plays out of context or without a strategy to play all the cycles (sometimes you get a sleeper so you remember from last quarter (i.e. WFMI, CNA) and you play otherwise you get days of "anticipatory upswing" or "anticipatory downswing" (this week we've had the upswing) then you prepare to lock in profits in the direction of the trend (long/call options)
Cycle II pick up PUTS and/or SHORT at or near target areas which are the resistance areas. We usually leave about 25% of the calls if the stock was up in anticipation so we can enjoy the hedge in case the stock explodes to upside.
CYCLE III after the report. sometimes you get a winner like LF (to downside) or PCLN to upside and you just stand back and enjoy adding some stock AFTER THE REPORT (NEVER HOLD ANY STOCK THROUGH THE REPORT. NEVER give "proclamations" about where the stock will go, it seldom goes there. We have seen lots of traders with a nice shade of egg on their faces)
If you're trading according to strategy and you could be with the dominant trend after the report through multiple days of DOWNSIDE following the multiple days of upside.
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