SteadyOptions is an options trading forum where you can find solutions from top options traders. Join Us!

We’ve all been there… researching options strategies and unable to find the answers we’re looking for. SteadyOptions has your solution.

How To Profit From PayPal Volatility


Many of SteadyOptions members are using the CML TradeMachine backtester. The Trade Machine allows to identify patterns that have repeatedly turned a profit over and over again, then see those results with no room for confusion or doubt. This is how traders profit from the option market — it’s preparation, not luck.

Couple of weeks ago, the CML published an article The Volatility Option Trade After Earnings in PayPal Holdings Inc.

The setup was:

"The week following PayPal Holdings Inc (NASDAQ:PYPL) has had one fairly consistent pattern -- volatility. If we take a myopic view after looking at the last three-years and focus on the last six-months, that pattern is yet more decisive. Irrespective of whether the earnings move was large or small, if we tested waiting one-day after earnings and then holding a long out of the money (40 delta) strangle for one-week (using two-week options), the results were quite strong. This trade opens one-day after earnings were announced to try to find a stock that moves a lot after the earnings announcement."

If we bought the out-of-the-money strangle in PayPal Holdings Inc (NASDAQ:PYPL) over the last three-years but only held it after earnings we get these results: 
 

PYPL
Long out-of-the-money strangle
 
% Wins: 64%
 
Wins: 7   Losses: 4
 
% Return:  174% 

Tap Here to See the Back-test


The backtest also defines very clear rules for the trade:

* Open the long out-of-the-money (40 delta) strangle one-calendar day after earnings.
* Close the strangle 7 calendar days after earnings. 
* Use the options closest to 14 days from expiration (but more than 7 days). 
 

On July 25, I posted the link to the PYPL potential trade on the forum:
 

image.png


On the next day I posted my entry:

image.png

Please note that this trade didn't make it into the official model portfolio due to higher potential risk - hence I mentioned "small allocation only".

The next day, some of the members started posting their exit prices:

image.png

image.png

I was out a day later for 27% gain:

image.png

Some members did even better:

image.png

And finally an interesting comment from another member:

image.png

Those are real trades, from real traders, posted in real time. 

Attention tastytrade: Buying premium does work - you just need to know how to do it.

This is how people profit from the option market. It's not guessing or speculation. Take a reasonable idea or hypothesis, use a rationale system to help overcome cognitive biases, and test it. Tap the link below to learn more: 

Tap Here to See the Tools at Work 

When you combine the best options trading community with the best backtester, the results are unbeatable.

Related articles:

What Is SteadyOptions?

12 Years CAGR of 114.5%

Full Trading Plan

Complete Portfolio Approach

Real-time trade sharing: entry, exit, and adjustments

Diversified Options Strategies

Exclusive Community Forum

Steady And Consistent Gains

High Quality Education

Risk Management, Portfolio Size

Performance based on real fills

Subscribe to SteadyOptions now and experience the full power of options trading!
Subscribe

Non-directional Options Strategies

10-15 trade Ideas Per Month

Targets 5-7% Monthly Net Return

Visit our Education Center

Recent Articles

Articles

  • SPX vs SPY Options: Which One Should You Trade? (2026 Guide)

    Both SPX and SPY options give you exposure to the S&P 500. They track the same 500 stocks, move nearly tick-for-tick, and offer the same core strategies — credit spreads, iron condors, butterflies, and 0DTE trades. Yet the two products settle differently, are taxed differently, and carry very different assignment risks.

    By krisbee,

    • 0 comments
    • 1541 views
  • Strike Price Effects Or Pinning Revisted

    Loyal readers of this blog will recall my post from 2019 “Pinning Down the ‘Option Pinning’”. If you have not heard of pinning have a look at that article as – spoiler – everything in it as well as Jeff Augen’s observations in his books which are referenced is still valid.

    By TrustyJules,

    • 0 comments
    • 1026 views
  • Could This Strategy Be The Holy Grail Of Investing?

    This is a reprint of my Seeking Alpha article from 2013. If you have SA subscription, you can read the full article including hundreds of comments here. For the record, the strategy implementation has changed since then, but the principle remains the same. You can read more here

    By Kim,

    • 6 comments
    • 4318 views
  • Why Traders Need Brokers: An Important Alliance

    Trading the financial markets can be rewarding, but it also offers its fair share of complexities and obstacles. When faced with thousands of financial instruments, fluctuating markets, and a range of platforms at their disposal, traders can feel overwhelmed.

    By Kim,

    • 0 comments
    • 1746 views
  • 8 Tips to Help New Investors Build Up Their Wealth and Manage Risks

    Investing your money is arguably the most effective way to build wealth, but it’s not some magic get-rich-quick scheme. It comes with risk. If you jump into investing, especially if you’re considering investing in cryptocurrency and treat it like gambling, the chances are that you’ll see the same results as gambling.

    By Kim,

    • 0 comments
    • 1131 views
  • No Really, It Will Be Different This Time Around!

    Whilst the Palantir CEO is carping on about the fact that the iPhone is the crowning achievement of civilization and nothing has changed our lives more, us investors are left wondering if all the money that is going into the future grand vista of Big Tech really is the proverbial land of milk and honey.

    By TrustyJules,

    • 0 comments
    • 2747 views
  • Is Bitcoin Worth Buying in 2026?

    If you want the answer to whether or not you should buy Bitcoin, you're in the right place! In recent years, the world has been introduced to an entirely new peer-to-peer currency that's made waves all over the globe. The cryptocurrency known as Bitcoin has been available since 2009, but it's been garnering worldwide attention ever since early 2018.

    By Kim,

    • 0 comments
    • 3042 views
  • Cryptocurrency Red Flags: Staying Smart As A Newbie Investor

    It might not surprise you to find out that the world of cryptocurrency has quite a few red flags in it. It’s easy to make a mistake as a newbie trader to begin with, but that’s not where the issues end. From malicious actors to shady trading platforms, there’s a lot you need to be aware of to both protect your investments and your identity. 

     

    By Kim,

    • 0 comments
    • 2517 views
  • From Wealth Building to Wealth Preserving: How to Diversify After You’ve Made It

    There's a time when the pursuit of success will change. Your hunger for growth in revenue, in scaling a company, or in stacking investments will begin to wane. You'll look at your account and see that you've crossed the line. At this point, you're no longer focused on proving to yourself that you can create wealth. Now you're thinking about making sure that wealth remains intact. This isn't a fear-based change; it's a maturity-based one. 

    By Kim,

    • 0 comments
    • 3405 views
  • Early Assignment Can Be a Gift

    For reasons that I don’t understand many rookie option traders fear being assigned an exercise notice on a previously sold option. In fact, assignment notice can be a free gift. That gift is likely to be worthless, but on occasion it turns out to be a very welcome surprise.

     

    By Mark Wolfinger,

    • 0 comments
    • 18125 views

  Report Article


We want to hear from you!


There are no comments to display.



Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Add a comment...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...