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How to Trade Options Before Earnings in Fabrinet (NYSE:FN) How to Trade Options Before Earnings in Fabrinet (NYSE:FN) Date Published: 2017-06-28 This article can be seen in a video or as a full written article below the video. PREFACE Trading options in Fabrinet (NYSE:FN) using a short window before earnings are released has been a staggering winner over the last several years. This is it -- this is how people profit from the option market. Identifying strategies that are tightly risk controlled, take no stock direction risk and no earnings risk. Strategies that are immune from a bull or bear market. STORY Everyone knows that the day of an earnings announcement is a risky event for a stock. But the question every option trader, whether professional or amateur, has long asked is if there is a way to profit from this known implied volatility rise. It turns out, that over the long-run, for stocks with certain tendencies, the answer is actually, yes. Yes, there is a systematic way to trade this repeating phenomenon, without making a bet on earnings or stock direction. THE SET UP What a trader wants to do is to see the results of buying an at the money straddle a couple of weeks before earnings, and then sell that straddle just before earnings. Here is the setup: We are testing opening the position 14 days before earnings and then closing the position 1 day before earnings. This is not making any earnings bet. This is not making any stock direction bet. Once we apply that simple rule to our back-test, we run it on an at-the-money straddle: RETURNS If we did this long at-the-money straddle in Fabrinet (NYSE:FN) over the last three-years but only held it before earnings we get these results: Click here to see the back-test live That's a 162% return over the last three-years, with 9 winning trades and 3 losing trades. But, let's take a step toward risk reduction before we move forward. While we are looking at this same trade, let's also set a rule that if at any point in the two-week period the straddle loses 25% of its value, we just close it and wait for the next pre-earnings cycle. While we're at it, we will do the same with the upside -- that is, if at any time during the two-weeks the straddle goes up 25%, we take the profits and close the trade. For clarity, this is what we test: And now we can see the results over the same three-year period: Click here to see the back-test live While we are taking 75% less risk, we are seeing about the same results -- we will continue down this risk adjusted path for the rest of this dossier. Digging Deeper Now we can see the results over the last two-years: Click here to see the back-test live That's a 126% return and 7 winning trades with 1 losing trade. Remember, this trade takes no stock direction risk and no earnings risk -- this is completely agnostic to a bull or bear market. Even further, that 126% actually came on just 16 weeks of trading (2-weeks per earnings cycle, 8 earnings cycles), which is over 400% annualized returns. Now we look at the last year: Click here to see the back-test live We see a 65.2% percent return on 3 winning trade and 1 losing trade. Finally, we can look at the last six-months: Click here to see the back-test live That's 40.1%, winning both of the last two pre-earnings trades. WHAT HAPPENED This is it -- this is how people profit from the option market. Identifying strategies that are tightly risk controlled, take no stock direction bets or earnings risk. It's preparation, not luck. To see how to do this for any stock we welcome you to watch this quick demonstration video: Tap Here to See the Tools at Work Thanks for reading. Risk Disclosure You should read the Characteristics and Risks of Standardized Options. Past performance is not an indication of future results. Trading futures and options involves the risk of loss. Please consider carefully whether futures or options are appropriate to your financial situation. Only risk capital should be used when trading futures or options. Investors could lose more than their initial investment. Past results are not necessarily indicative of future results. The risk of loss in trading can be substantial, carefully consider the inherent risks of such an investment in light of your financial condition.

How to Trade Options Before Earnings in Broadcom Limited (NASDAQ:AVGO) How to Trade Options Before Earnings in Broadcom Limited (NASDAQ:AVGO) Date Published: 2017-05-15 PREFACE Trading options in a short window before earnings are released benefits from the rising implied volatility but avoids the risk into the actual earnings release and also avoids any kind of stock direction risk. This approach has returned a annualized rate of 198%. Now that's worth looking into. STORY Everyone knows that the day of an earnings announcement is a risky event for a stock. This can be explicitly seen in the option market, where the implied volatility (the expected stock move) rises into the earnings event. The question every option trader, whether professional or amateur, has long asked is if there is a way to profit from this known volatility rise. It turns out, that over the long-run, for stocks with certain tendencies like Broadcom Limited (NASDAQ:AVGO) the answer is actually, yes. Yes, there is a systematic way to trade this repeating phenomenon, without making a bet on earnings or stock direction. THE SET UP What a trader wants to do is to see the results of buying an at the money straddle a few days before earnings, and then sell that straddle just before earnings. The goal, is two-fold: (i) to benefit from that known implied volatility rise, and (ii) to own the straddle for a very short period of time when the stock might move 'a lot,' but taking no earnings bets. If either of those two phenomena occur, there's a very good chance this wins, if neither occur, the amount risked is normally quite small. Here is the setup: We are testing opening the position 6 days before earnings and then closing the position 1 day before earnings. This is not making any earnings bet. This is not making any stock direction bet. Once we apply that simple rule to our back-test, we run it on an at-the-money straddle: RETURNS If we did this long at-the-money (also called '50-delta') straddle in Broadcom Limited (NASDAQ:AVGO) over the last three-years but only held it before earnings we get these results: Long At-the-Money Straddle * Monthly Options * Back-test length: three-years * Open 6-days Before Earnings * Close 1-day Before Earnings * Holding Period: 5-Days per Earnings Winning Trades: 5 Losing Trades: 7 Pre-Earnings Straddle Return: 17.1% Annualized Return: 102% We see a 17.1% return, testing this over the last 12 earnings dates in Broadcom Limited. That's a total of just 60 days (5 days for each earnings date, over 12 earnings dates). That's a annualized rate of 102%. We can also see that this strategy hasn't been a winner all the time, rather it has won 5 times and lost 7 times, but here's the key -- it wins about half of the time, but the average gain per winning trade is substantially larger than the average loss on a losing trade: Consistently Successful This idea has also been a successful approach over the last two-years: Long At-the-Money Straddle * Monthly Options * Back-test length: two-years * Open 6-days Before Earnings * Close 1-day Before Earnings * Holding Period: 5-Days per Earnings Winning Trades: 4 Losing Trades: 4 Pre-Earnings Straddle Return: 22% Annualized Return: 198% Now we see a 22% return, testing this over the last 8 earnings dates which is a annualized rate of 198%. Yet again, we see a trade that wins about half the time, but the average win is much larger than the average loss: If you really want to see how we found this, and how to do it for other stocks like Apple, Google and Amazon, here is a 1-minute and 34-second video that every professional option trader would rather that you don't see. Learn more here: Try the Back-tester Yourself WHAT HAPPENED There are patterns to stock behaviors before and after earnings and those patterns reveal opportunities in the option market, without taking the actual risk of earnings. You can find them, stock by stock. This is how people profit from the option market -- it's preparation, not luck. To see how to do this for any stock we welcome you to watch this quick demonstration video: Tap Here to See the Tools at Work Thanks for reading. Risk Disclosure You should read the Characteristics and Risks of Standardized Options. Past performance is not an indication of future results. Trading futures and options involves the risk of loss. Please consider carefully whether futures or options are appropriate to your financial situation. Only risk capital should be used when trading futures or options. Investors could lose more than their initial investment. Past results are not necessarily indicative of future results. The risk of loss in trading can be substantial, carefully consider the inherent risks of such an investment in light of your financial condition. Back-test Link

The Secret Behind Options Pre-Earnings Trading in Intel Corporation (NASDAQ:INTC) Intel Corporation (NASDAQ:INTC): The Wonderful Secret Behind Options Pre-Earnings Trading Date Published: 2017-05-4 PREFACE There is a wonderful secret to trading options right before earnings announcements in Intel Corporation (NASDAQ:INTC) , and really many stocks, that benefits from the rising implied volatility but avoids the risk into the actual earnings release and also avoids any kind of stock direction risk. THE WONDERFUL SECRET What a trader wants to do is to see the results of buying an at the money straddle a few days before earnings, and then sell that straddle just before earnings. The goal, is two-fold: (i) to benefit from that known implied volatility rise, and (ii) to own the straddle for a very short period of time when the stock might move 'a lot,' but never take the risk of actually owning options during the earnings release. If either of those two phenomena occur, there's a very good chance this wins, if neither occur, the amount risked is normally quite small. Here is the setup: We are testing opening the position in Intel Corporation 6 days before earnings and then closing the position right before earnings. This is not making any earnings bet. This is notmaking any stock direction bet. Once we apply that simple rule to our back-test, we run it on an at-the-money straddle: RETURNS If we did this long at-the-money (also called '50-delta') straddle in Intel Corporation (NASDAQ:INTC) over the last three-years but only held it before earnings we get these results: We see a 47.8% return, testing this over the last 12 earnings dates in Intel Corporation. That's a total of just 72 days (6 days for each earnings date, over 12 earnings dates). That's a annualized rate of 242%. We can also see that the win/loss rate is split with 6-wins and 6-losses, yet the return is enormous. That means the winning trades are much larger than the losing trades, which is exactly what a successful trading strategy attempts to do. No magic bullets -- rather smart methodologies for wealth creation. MORE TO IT THAN MEETS THE EYE While this strategy is benefiting from the implied volatility rise into earnings for Intel Corporation (NASDAQ:INTC), what it's really doing is far more intelligent. The ideal stocks for this strategy have a couple of common characteristics: (i) The companies rarely pre-announce earnings -- this is an investment that does not look to make an earnings bet, so an earnings pre-announcement is the opposite of what we're hoping for. (ii) The underlying stock price of these companies tend to move a lot (or some) as earnings approach and various institutions and traders shuffle the stock price around in anticipation of the earnings result. The more one sided the outside world starts betting on direction -- up or down, the better it is to own the straddle. WHAT HAPPENED This is it -- this is how people profit from the option market -- it's preparation, not luck. Test the results on Apple Inc and Alphabet Inc, and the results are staggering. To see how to do this for any stock and for any strategy with just the click of a few buttons, we welcome you to watch this quick demonstration video: Tap Here to See the Tools at Work Thanks for reading. Risk Disclosure You should read the Characteristics and Risks of Standardized Options. Past performance is not an indication of future results. Trading futures and options involves the risk of loss. Please consider carefully whether futures or options are appropriate to your financial situation. Only risk capital should be used when trading futures or options. Investors could lose more than their initial investment. Past results are not necessarily indicative of future results. The risk of loss in trading can be substantial, carefully consider the inherent risks of such an investment in light of your financial condition. The author has no position in Intel Corporation Inc (NASDAQ:INTC) as of this writing. Back-test Link (does require custom earnings settings).