Placing Neutral Trades Over Earnings

Big Names Reporting Thursday/Friday

Thursday brings in another big day of earnings, with a slew of companies reporting after the bell including:

  • Apple (AAPL)
  • Coinbase (COIN)
  • Draftkings (DKNG)
  • Fortinet (FTNT)
  • Cloudflare (NET)
  • Block (SQ)
  • Expedia (EXPE)
  • and more!

Hershey’s (HSY) also reports before the bell on Friday.

Earnings Strategy

Many of these big names have provided opportunity for out-of-the-money butterflies due to the volatility involved, but I’m spying a ticker that I think will be a good choice for a neutral strategy: Hershey’s.

I utilize my neutral strategy when a ticker has a much larger market maker move than what the stock typically moves, especially when it’s a stock that doesn’t typically move much over earnings. HSY, for example, has a 4.5% move being priced in, but it typically moves less than 2%. This gives me a good opportunity to sell some premium.

Premium Selling Example

So, how does one sell premium over earnings? I used this same strategy with Visa last week, which I featured in a Trade Review video. Check out the example below!

P.S. Want to join me while I go over earnings analysis live? I’m doing just that in the Simpler Central room thrice weekly! Click on the link to learn more. 

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