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如何用期權玩轉23年Q4財報季?
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How to use options to make money during the earnings season?

The publication of financial reports is an important day for a listed company. There are 4 earnings seasons every year, and every time it's a sniper's field for options users.
The publication of financial reports is an important day for a listed company. There are 4 earnings seasons every year, and every time it's a sniper's field for options users. The earnings press conference brought phased official news from the company, releasing the market's sentiment, either positive or pessimistic. Faced with this sentiment, the market will respond quickly, causing fluctuations in stock prices. Fluctuations are closely related to option prices. Three elements of options Before we begin to introduce options strategies for the earnings season, let's review the three factors that influence options: 1) Time: If other conditions are met, the closer to the date of exercise, the cheaper the option. The so-called “wear and tear” of options generally refers mainly to the decline in time value. As we said before, options are like insurance. The longer the insurance is insured, the more expensive it is. There are so many long nights and dreams. The longer it is until the expiration date, the more expensive it is. 2) The price of the underlying stock. For call, the lower the exercise price, the more expensive; for put, the higher the exercise price, the more expensive. The so-called “buy low and sell high” is difficult to achieve; that is, the more valuable it is, the more expensive the corresponding option. 3) Implied Volatility (IV): The higher the IV, the more expensive the options. The more likely the underlying stock is to fluctuate greatly, then the more expensive the options will be. It can be understood this way: the more it jumps up and down, the more unstable the trend, and the more opportunities there are for arbitrage, the more expensive the option price. So, what do you buy when you buy options? As mentioned in the previous introduction, buying options is tantamount to buying insurance. Let's be a little more professional today. If you think of an option as a valuable contract, it includes:Intrinsic value...
The earnings press conference brought phased official news from the company, releasing the market's sentiment, either positive or pessimistic. Faced with this sentiment, the market will respond quickly, causing fluctuations in stock prices.
Fluctuations are closely related to option prices.
Three elements of options
Before we begin to introduce options strategies for the earnings season, let's review the three factors that influence options:
1) Time: If other conditions are met, the closer to the date of exercise, the cheaper the option. The so-called “wear and tear” of options generally refers mainly to the decline in time value.
As we said before, options are like insurance. The longer the insurance is insured, the more expensive it is. There are so many long nights and dreams. The longer it is until the expiration date, the more expensive it is.
2) The price of the underlying stock. For call, the lower the exercise price, the more expensive; for put, the higher the exercise price, the more expensive. The so-called “buy low and sell high” is difficult to achieve; that is, the more valuable it is, the more expensive the corresponding option.
3) Implied Volatility (IV): The higher the IV, the more expensive the options.
The more likely the underlying stock is to fluctuate greatly, then the more expensive the options will be. It can be understood this way: the more it jumps up and down, the more unstable the trend, and the more opportunities there are for arbitrage, the more expensive the option price.
The publication of financial reports is an important day for a listed company. There are 4 earnings seasons every year, and every time it's a sniper's field for options users. The earnings press conference brought phased official news from the company, releasing the market's sentiment, either positive or pessimistic. Faced with this sentiment, the market will respond quickly, causing fluctuations in stock prices. Fluctuations are closely related to option prices. Three elements of options Before we begin to introduce options strategies for the earnings season, let's review the three factors that influence options: 1) Time: If other conditions are met, the closer to the date of exercise, the cheaper the option. The so-called “wear and tear” of options generally refers mainly to the decline in time value. As we said before, options are like insurance. The longer the insurance is insured, the more expensive it is. There are so many long nights and dreams. The longer it is until the expiration date, the more expensive it is. 2) The price of the underlying stock. For call, the lower the exercise price, the more expensive; for put, the higher the exercise price, the more expensive. The so-called “buy low and sell high” is difficult to achieve; that is, the more valuable it is, the more expensive the corresponding option. 3) Implied Volatility (IV): The higher the IV, the more expensive the options. The more likely the underlying stock is to fluctuate greatly, then the more expensive the options will be. It can be understood this way: the more it jumps up and down, the more unstable the trend, and the more opportunities there are for arbitrage, the more expensive the option price. So, what do you buy when you buy options? As mentioned in the previous introduction, buying options is tantamount to buying insurance. Let's be a little more professional today. If you think of an option as a valuable contract, it includes:Intrinsic value...
So, what do you buy when you buy options?
As mentioned in the previous introduction, buying options is tantamount to buying insurance. Let's be a little more professional today.
If you think of an option as a valuable contract, it includes:Intrinsic value+time value(Also commonly referred to as: real value and imaginary value) where the time value correlates with the implied volatility of the option.
With the above foundation, let's get to the point (the following content is for study only and does not constitute investment advice):
What are some common actions during the earnings season?
1. Shareholding+buy put/sell put, or buy call
For a more detailed introduction, check out the previous article:
Options Strategy in the Case of Decline in Shareholdinghttps://q.futunn.com/feed/107676081261700
Assuming I hold tens of thousands of shares of Tencent, would I be worried about his financial report plummeting after it was released? Generally speaking, before financial reports, many shareholders will report earningsBuy some insurance for your underlying stock。
1) Shareholding+buying
When you pay the premium, you can lock in a little bit of the selling price, that is, lock in your profit;
I need to explain here that this strategy is a bearish scenario. If you exercise power, you won't hold shares in the end.
2) Shareholding+selling
If you collect premiums and have sufficient funds, are optimistic about stocks for a long time, and plan to increase your positions, then you can operate like this and prepare to receive goods.
In this scenario, the purchase price is actually locked in. If you exercise power, you will eventually buy the stock at the price of the exercise, and you will hold the shares. You need to be careful to understand the difference between the “holding+sell put” scenario and the “holding+buy put” scenario, and apply the market situation.
3) Discipline call
Hold the underlying stock plus sell the call, collect royalties, and worry that the stock will fall or not rise after the earnings report.
Assuming today is March 9, 2022, I bought 1 lot of Tencent at the price of 380 Hong Kong dollars and spent 38,000 Hong Kong dollars. Tencent will release its financial report on March 23 (Wednesday). Then I determined that Tencent's Q4 and annual report for '21 may not meet expectations. It is expected that on Wednesday, March 30, Tencent's stock price will not exceed HK$400. If it goes up to HK$400, you can sell it.
[Sales call]
So on March 9, I sold a call with an expiration date of March 30 with an exercise price of HK$400. The price was 9.68 Hong Kong dollars. When I sold a call, I received a premium of 968 Hong Kong dollars. At this point, add this money to my shareholding cost. My current Tencent hand, cost price = (38000-968) /1000=370.32 HKD
[Profit and loss calculation]
By March 30th
Situation 1:If the stock price doesn't reach 400 Hong Kong dollars, then this call won't exercise its power, IEarn HK$968The royalties continue to hold this first hand of Tencent stock.
Situation 2:The stock price reached 400 and above. At this point, I needed to sell the stock at 400. At this point, in addition to earning a premium of 968 Hong Kong dollars, I was also able to earn a share price difference: (400-380) *100 = 2,000 Hong Kong dollars. In this wave, IEarn 968+2000=2,968 HKD. However, if Tencent's stock price continues to rise above 400, it has nothing to do with me.
Futu'sAdvanced options quotesIt provides a wealth of profit and loss analysis to aid decision-making.
Visit the detailed quotation page of the call you are selling from the options chain, then click [Analyze] - [Profit and Loss Analysis]. In the case of selling a call, select [Buy the same number of underlying shares] on the right. This is a profit and loss analysis of a profitable call. As can be seen from the data, under this combination, as long as the stock rises to 373.56 Hong Kong dollars, it is profitable. It's just that the benefits are limited.
The publication of financial reports is an important day for a listed company. There are 4 earnings seasons every year, and every time it's a sniper's field for options users. The earnings press conference brought phased official news from the company, releasing the market's sentiment, either positive or pessimistic. Faced with this sentiment, the market will respond quickly, causing fluctuations in stock prices. Fluctuations are closely related to option prices. Three elements of options Before we begin to introduce options strategies for the earnings season, let's review the three factors that influence options: 1) Time: If other conditions are met, the closer to the date of exercise, the cheaper the option. The so-called “wear and tear” of options generally refers mainly to the decline in time value. As we said before, options are like insurance. The longer the insurance is insured, the more expensive it is. There are so many long nights and dreams. The longer it is until the expiration date, the more expensive it is. 2) The price of the underlying stock. For call, the lower the exercise price, the more expensive; for put, the higher the exercise price, the more expensive. The so-called “buy low and sell high” is difficult to achieve; that is, the more valuable it is, the more expensive the corresponding option. 3) Implied Volatility (IV): The higher the IV, the more expensive the options. The more likely the underlying stock is to fluctuate greatly, then the more expensive the options will be. It can be understood this way: the more it jumps up and down, the more unstable the trend, and the more opportunities there are for arbitrage, the more expensive the option price. So, what do you buy when you buy options? As mentioned in the previous introduction, buying options is tantamount to buying insurance. Let's be a little more professional today. If you think of an option as a valuable contract, it includes:Intrinsic value...
The publication of financial reports is an important day for a listed company. There are 4 earnings seasons every year, and every time it's a sniper's field for options users. The earnings press conference brought phased official news from the company, releasing the market's sentiment, either positive or pessimistic. Faced with this sentiment, the market will respond quickly, causing fluctuations in stock prices. Fluctuations are closely related to option prices. Three elements of options Before we begin to introduce options strategies for the earnings season, let's review the three factors that influence options: 1) Time: If other conditions are met, the closer to the date of exercise, the cheaper the option. The so-called “wear and tear” of options generally refers mainly to the decline in time value. As we said before, options are like insurance. The longer the insurance is insured, the more expensive it is. There are so many long nights and dreams. The longer it is until the expiration date, the more expensive it is. 2) The price of the underlying stock. For call, the lower the exercise price, the more expensive; for put, the higher the exercise price, the more expensive. The so-called “buy low and sell high” is difficult to achieve; that is, the more valuable it is, the more expensive the corresponding option. 3) Implied Volatility (IV): The higher the IV, the more expensive the options. The more likely the underlying stock is to fluctuate greatly, then the more expensive the options will be. It can be understood this way: the more it jumps up and down, the more unstable the trend, and the more opportunities there are for arbitrage, the more expensive the option price. So, what do you buy when you buy options? As mentioned in the previous introduction, buying options is tantamount to buying insurance. Let's be a little more professional today. If you think of an option as a valuable contract, it includes:Intrinsic value...
2. Price difference combination (Spread)
Price spread strategy, as the name suggests, is that this combination has a price difference. It consists of a long option position and an option short position, and the options within the combination have the same scale and the bullish and bearish direction is the same (either two calls or two puts).
If the trading call is the most frequently used option combination, then the spread combination is the most versatile combination.
Common spread combinations include the following:
The publication of financial reports is an important day for a listed company. There are 4 earnings seasons every year, and every time it's a sniper's field for options users. The earnings press conference brought phased official news from the company, releasing the market's sentiment, either positive or pessimistic. Faced with this sentiment, the market will respond quickly, causing fluctuations in stock prices. Fluctuations are closely related to option prices. Three elements of options Before we begin to introduce options strategies for the earnings season, let's review the three factors that influence options: 1) Time: If other conditions are met, the closer to the date of exercise, the cheaper the option. The so-called “wear and tear” of options generally refers mainly to the decline in time value. As we said before, options are like insurance. The longer the insurance is insured, the more expensive it is. There are so many long nights and dreams. The longer it is until the expiration date, the more expensive it is. 2) The price of the underlying stock. For call, the lower the exercise price, the more expensive; for put, the higher the exercise price, the more expensive. The so-called “buy low and sell high” is difficult to achieve; that is, the more valuable it is, the more expensive the corresponding option. 3) Implied Volatility (IV): The higher the IV, the more expensive the options. The more likely the underlying stock is to fluctuate greatly, then the more expensive the options will be. It can be understood this way: the more it jumps up and down, the more unstable the trend, and the more opportunities there are for arbitrage, the more expensive the option price. So, what do you buy when you buy options? As mentioned in the previous introduction, buying options is tantamount to buying insurance. Let's be a little more professional today. If you think of an option as a valuable contract, it includes:Intrinsic value...

If I were to explain all these strategies once, it would take some time. There is a memory trick you can memorize first and then understand:
Buying high and selling low is a bear spread; buying low and selling high is a bullish spread; closing more than spending is a credit spread; spending more than income is a debit spread.
Today we'll pick two strategies that are suitable for operation during the earnings season.
The publication of financial reports is an important day for a listed company. There are 4 earnings seasons every year, and every time it's a sniper's field for options users. The earnings press conference brought phased official news from the company, releasing the market's sentiment, either positive or pessimistic. Faced with this sentiment, the market will respond quickly, causing fluctuations in stock prices. Fluctuations are closely related to option prices. Three elements of options Before we begin to introduce options strategies for the earnings season, let's review the three factors that influence options: 1) Time: If other conditions are met, the closer to the date of exercise, the cheaper the option. The so-called “wear and tear” of options generally refers mainly to the decline in time value. As we said before, options are like insurance. The longer the insurance is insured, the more expensive it is. There are so many long nights and dreams. The longer it is until the expiration date, the more expensive it is. 2) The price of the underlying stock. For call, the lower the exercise price, the more expensive; for put, the higher the exercise price, the more expensive. The so-called “buy low and sell high” is difficult to achieve; that is, the more valuable it is, the more expensive the corresponding option. 3) Implied Volatility (IV): The higher the IV, the more expensive the options. The more likely the underlying stock is to fluctuate greatly, then the more expensive the options will be. It can be understood this way: the more it jumps up and down, the more unstable the trend, and the more opportunities there are for arbitrage, the more expensive the option price. So, what do you buy when you buy options? As mentioned in the previous introduction, buying options is tantamount to buying insurance. Let's be a little more professional today. If you think of an option as a valuable contract, it includes:Intrinsic value...
2.1 Bull Market Bullish Spread Combination (Bull Call Spread)
Combination method:Buy a call with a low price, sell a call with a high price
Profit and loss situation:The biggest benefit is the price difference of the exercise price, and the biggest loss is the loss of the premium
Combined style:It is a “moderately bullish” combination. It is expected that after the earnings report, the stock price will rise slightly. It is suitable for arbitrage at this time to earn some living expenses
To show professionalism, let's use a profit and loss chart for a combination of bullish spreads in a bull market.
The publication of financial reports is an important day for a listed company. There are 4 earnings seasons every year, and every time it's a sniper's field for options users. The earnings press conference brought phased official news from the company, releasing the market's sentiment, either positive or pessimistic. Faced with this sentiment, the market will respond quickly, causing fluctuations in stock prices. Fluctuations are closely related to option prices. Three elements of options Before we begin to introduce options strategies for the earnings season, let's review the three factors that influence options: 1) Time: If other conditions are met, the closer to the date of exercise, the cheaper the option. The so-called “wear and tear” of options generally refers mainly to the decline in time value. As we said before, options are like insurance. The longer the insurance is insured, the more expensive it is. There are so many long nights and dreams. The longer it is until the expiration date, the more expensive it is. 2) The price of the underlying stock. For call, the lower the exercise price, the more expensive; for put, the higher the exercise price, the more expensive. The so-called “buy low and sell high” is difficult to achieve; that is, the more valuable it is, the more expensive the corresponding option. 3) Implied Volatility (IV): The higher the IV, the more expensive the options. The more likely the underlying stock is to fluctuate greatly, then the more expensive the options will be. It can be understood this way: the more it jumps up and down, the more unstable the trend, and the more opportunities there are for arbitrage, the more expensive the option price. So, what do you buy when you buy options? As mentioned in the previous introduction, buying options is tantamount to buying insurance. Let's be a little more professional today. If you think of an option as a valuable contract, it includes:Intrinsic value...

Just speaking, you have to practice.
Next, let's take Pinduoduo (PDD) as an example (the following data is fictional data, for study only)
The publication of financial reports is an important day for a listed company. There are 4 earnings seasons every year, and every time it's a sniper's field for options users. The earnings press conference brought phased official news from the company, releasing the market's sentiment, either positive or pessimistic. Faced with this sentiment, the market will respond quickly, causing fluctuations in stock prices. Fluctuations are closely related to option prices. Three elements of options Before we begin to introduce options strategies for the earnings season, let's review the three factors that influence options: 1) Time: If other conditions are met, the closer to the date of exercise, the cheaper the option. The so-called “wear and tear” of options generally refers mainly to the decline in time value. As we said before, options are like insurance. The longer the insurance is insured, the more expensive it is. There are so many long nights and dreams. The longer it is until the expiration date, the more expensive it is. 2) The price of the underlying stock. For call, the lower the exercise price, the more expensive; for put, the higher the exercise price, the more expensive. The so-called “buy low and sell high” is difficult to achieve; that is, the more valuable it is, the more expensive the corresponding option. 3) Implied Volatility (IV): The higher the IV, the more expensive the options. The more likely the underlying stock is to fluctuate greatly, then the more expensive the options will be. It can be understood this way: the more it jumps up and down, the more unstable the trend, and the more opportunities there are for arbitrage, the more expensive the option price. So, what do you buy when you buy options? As mentioned in the previous introduction, buying options is tantamount to buying insurance. Let's be a little more professional today. If you think of an option as a valuable contract, it includes:Intrinsic value...
Assuming that PDD plans to release financial reports on March 16, I judge that the stock price earnings report will exceed expectations after it is released on March 9. So on March 9th, I did the following
1. Buy one that expires on March 18. The exercise price is 38 calls. Pay the premium: 425 US dollars
2. When you sell a call that expires on March 18, the exercise price is 42 calls, you receive a premium of $239
Cumulative payment: $186 premium.
The financial report was released on March 16. On March 18, the expiration date of the right:
Assumption 1: The stock price rises above $42 (including $42)
Both options will work, so it's equivalent to selling 100 shares at 42 US dollars and then buying 100 shares at 38 US dollars, so the profit is 100x (42-38) = 400 dollars. Plus the premium paid, the total profit is 400-186 = 214 US dollars. This is the biggest profit.
Assumption 2: If the stock price is below 38
All options will not be exercised, so loss = premium paid by buying call - premium received by selling call) = 425-239 = $186, which is the biggest loss.
Assumption 3: The share price is between 38 and 42
The profit balance point for this combination is 40.21 dollars. If the stock price exceeds 40.21 US dollars, it is profit, and below 40.21 US dollars is loss.
How do you view the break-even point of an option portfolio?
Currently, the option high price function of Bull Niu supports checking the profit and loss of option combinations. The specific path is as follows:
1. Select any option in the combination to go to the details page. I chose Call with an exercise price of 42, and then click “Analyze” for the detailed option price.
The publication of financial reports is an important day for a listed company. There are 4 earnings seasons every year, and every time it's a sniper's field for options users. The earnings press conference brought phased official news from the company, releasing the market's sentiment, either positive or pessimistic. Faced with this sentiment, the market will respond quickly, causing fluctuations in stock prices. Fluctuations are closely related to option prices. Three elements of options Before we begin to introduce options strategies for the earnings season, let's review the three factors that influence options: 1) Time: If other conditions are met, the closer to the date of exercise, the cheaper the option. The so-called “wear and tear” of options generally refers mainly to the decline in time value. As we said before, options are like insurance. The longer the insurance is insured, the more expensive it is. There are so many long nights and dreams. The longer it is until the expiration date, the more expensive it is. 2) The price of the underlying stock. For call, the lower the exercise price, the more expensive; for put, the higher the exercise price, the more expensive. The so-called “buy low and sell high” is difficult to achieve; that is, the more valuable it is, the more expensive the corresponding option. 3) Implied Volatility (IV): The higher the IV, the more expensive the options. The more likely the underlying stock is to fluctuate greatly, then the more expensive the options will be. It can be understood this way: the more it jumps up and down, the more unstable the trend, and the more opportunities there are for arbitrage, the more expensive the option price. So, what do you buy when you buy options? As mentioned in the previous introduction, buying options is tantamount to buying insurance. Let's be a little more professional today. If you think of an option as a valuable contract, it includes:Intrinsic value...
The publication of financial reports is an important day for a listed company. There are 4 earnings seasons every year, and every time it's a sniper's field for options users. The earnings press conference brought phased official news from the company, releasing the market's sentiment, either positive or pessimistic. Faced with this sentiment, the market will respond quickly, causing fluctuations in stock prices. Fluctuations are closely related to option prices. Three elements of options Before we begin to introduce options strategies for the earnings season, let's review the three factors that influence options: 1) Time: If other conditions are met, the closer to the date of exercise, the cheaper the option. The so-called “wear and tear” of options generally refers mainly to the decline in time value. As we said before, options are like insurance. The longer the insurance is insured, the more expensive it is. There are so many long nights and dreams. The longer it is until the expiration date, the more expensive it is. 2) The price of the underlying stock. For call, the lower the exercise price, the more expensive; for put, the higher the exercise price, the more expensive. The so-called “buy low and sell high” is difficult to achieve; that is, the more valuable it is, the more expensive the corresponding option. 3) Implied Volatility (IV): The higher the IV, the more expensive the options. The more likely the underlying stock is to fluctuate greatly, then the more expensive the options will be. It can be understood this way: the more it jumps up and down, the more unstable the trend, and the more opportunities there are for arbitrage, the more expensive the option price. So, what do you buy when you buy options? As mentioned in the previous introduction, buying options is tantamount to buying insurance. Let's be a little more professional today. If you think of an option as a valuable contract, it includes:Intrinsic value...
2. Underline the expiry equity profit and loss chart area, select [Combination], then click the option next to the long strategy, as shown on the right below. Select Bull Call Spread, then adjust the content in the 34th red frame to adjust the combination you plan to operate. The break-even chart of this combination will be shown below, and a more detailed profit and loss analysis will be calculated at the bottom.
The publication of financial reports is an important day for a listed company. There are 4 earnings seasons every year, and every time it's a sniper's field for options users. The earnings press conference brought phased official news from the company, releasing the market's sentiment, either positive or pessimistic. Faced with this sentiment, the market will respond quickly, causing fluctuations in stock prices. Fluctuations are closely related to option prices. Three elements of options Before we begin to introduce options strategies for the earnings season, let's review the three factors that influence options: 1) Time: If other conditions are met, the closer to the date of exercise, the cheaper the option. The so-called “wear and tear” of options generally refers mainly to the decline in time value. As we said before, options are like insurance. The longer the insurance is insured, the more expensive it is. There are so many long nights and dreams. The longer it is until the expiration date, the more expensive it is. 2) The price of the underlying stock. For call, the lower the exercise price, the more expensive; for put, the higher the exercise price, the more expensive. The so-called “buy low and sell high” is difficult to achieve; that is, the more valuable it is, the more expensive the corresponding option. 3) Implied Volatility (IV): The higher the IV, the more expensive the options. The more likely the underlying stock is to fluctuate greatly, then the more expensive the options will be. It can be understood this way: the more it jumps up and down, the more unstable the trend, and the more opportunities there are for arbitrage, the more expensive the option price. So, what do you buy when you buy options? As mentioned in the previous introduction, buying options is tantamount to buying insurance. Let's be a little more professional today. If you think of an option as a valuable contract, it includes:Intrinsic value...
The publication of financial reports is an important day for a listed company. There are 4 earnings seasons every year, and every time it's a sniper's field for options users. The earnings press conference brought phased official news from the company, releasing the market's sentiment, either positive or pessimistic. Faced with this sentiment, the market will respond quickly, causing fluctuations in stock prices. Fluctuations are closely related to option prices. Three elements of options Before we begin to introduce options strategies for the earnings season, let's review the three factors that influence options: 1) Time: If other conditions are met, the closer to the date of exercise, the cheaper the option. The so-called “wear and tear” of options generally refers mainly to the decline in time value. As we said before, options are like insurance. The longer the insurance is insured, the more expensive it is. There are so many long nights and dreams. The longer it is until the expiration date, the more expensive it is. 2) The price of the underlying stock. For call, the lower the exercise price, the more expensive; for put, the higher the exercise price, the more expensive. The so-called “buy low and sell high” is difficult to achieve; that is, the more valuable it is, the more expensive the corresponding option. 3) Implied Volatility (IV): The higher the IV, the more expensive the options. The more likely the underlying stock is to fluctuate greatly, then the more expensive the options will be. It can be understood this way: the more it jumps up and down, the more unstable the trend, and the more opportunities there are for arbitrage, the more expensive the option price. So, what do you buy when you buy options? As mentioned in the previous introduction, buying options is tantamount to buying insurance. Let's be a little more professional today. If you think of an option as a valuable contract, it includes:Intrinsic value...
Note: As you can see, there is a discrepancy between the analysis in the picture below and the calculation given above. These data are all calculated based on historical data, and the actual profit and loss needs to be determined based on the order transaction situation.
2.2 Bear Market Bearish Spread Combination (Bear Put Spread)
Combination method:Buy a high-priced put, sell a low-priced put
Profit and loss situation:The biggest benefit is the price difference between the exercise price, and the biggest loss is the payment of the premium
Combined style:It's a “moderately bearish” combination. It is expected to fall after the earnings report is released, but it won't drop much, and it's not expected to fall below a certain price.
Take Tesla stock as an example:
The publication of financial reports is an important day for a listed company. There are 4 earnings seasons every year, and every time it's a sniper's field for options users. The earnings press conference brought phased official news from the company, releasing the market's sentiment, either positive or pessimistic. Faced with this sentiment, the market will respond quickly, causing fluctuations in stock prices. Fluctuations are closely related to option prices. Three elements of options Before we begin to introduce options strategies for the earnings season, let's review the three factors that influence options: 1) Time: If other conditions are met, the closer to the date of exercise, the cheaper the option. The so-called “wear and tear” of options generally refers mainly to the decline in time value. As we said before, options are like insurance. The longer the insurance is insured, the more expensive it is. There are so many long nights and dreams. The longer it is until the expiration date, the more expensive it is. 2) The price of the underlying stock. For call, the lower the exercise price, the more expensive; for put, the higher the exercise price, the more expensive. The so-called “buy low and sell high” is difficult to achieve; that is, the more valuable it is, the more expensive the corresponding option. 3) Implied Volatility (IV): The higher the IV, the more expensive the options. The more likely the underlying stock is to fluctuate greatly, then the more expensive the options will be. It can be understood this way: the more it jumps up and down, the more unstable the trend, and the more opportunities there are for arbitrage, the more expensive the option price. So, what do you buy when you buy options? As mentioned in the previous introduction, buying options is tantamount to buying insurance. Let's be a little more professional today. If you think of an option as a valuable contract, it includes:Intrinsic value...
The date of Tesla's exercise of power is March 11 in the put option chain.
1. Sell a put with an exercise price of 790
2. Buy a put with an exercise price of 810
This forms a “bear market bearish spread” option strategy combination.
By March 11th:
Assumption 1: The stock price did not fall to 810, above 810
These two options were not exercised. Revenue = premium received from selling PUT - premium spent buying PUT = 915-1530 = -$615, which was the biggest loss.
Assumption 2: If the stock price is below 790
Both options were exercised, which is equivalent to selling 100 shares at the price of 810 and then buying them at the price of 790, so the profit was 100x (810-790) = 3,000 dollars. Plus the premium income, the total loss was 3000 - +580 = 3,580 US dollars.
Assumption 3: The share price is between 790 and 810
The balance point of profit and loss for this combination is $801.85. If the stock price exceeds $801.85, it is a loss; below $801.85 is a profit.
The estimate of the break-even point is shown in the figure below:
The publication of financial reports is an important day for a listed company. There are 4 earnings seasons every year, and every time it's a sniper's field for options users. The earnings press conference brought phased official news from the company, releasing the market's sentiment, either positive or pessimistic. Faced with this sentiment, the market will respond quickly, causing fluctuations in stock prices. Fluctuations are closely related to option prices. Three elements of options Before we begin to introduce options strategies for the earnings season, let's review the three factors that influence options: 1) Time: If other conditions are met, the closer to the date of exercise, the cheaper the option. The so-called “wear and tear” of options generally refers mainly to the decline in time value. As we said before, options are like insurance. The longer the insurance is insured, the more expensive it is. There are so many long nights and dreams. The longer it is until the expiration date, the more expensive it is. 2) The price of the underlying stock. For call, the lower the exercise price, the more expensive; for put, the higher the exercise price, the more expensive. The so-called “buy low and sell high” is difficult to achieve; that is, the more valuable it is, the more expensive the corresponding option. 3) Implied Volatility (IV): The higher the IV, the more expensive the options. The more likely the underlying stock is to fluctuate greatly, then the more expensive the options will be. It can be understood this way: the more it jumps up and down, the more unstable the trend, and the more opportunities there are for arbitrage, the more expensive the option price. So, what do you buy when you buy options? As mentioned in the previous introduction, buying options is tantamount to buying insurance. Let's be a little more professional today. If you think of an option as a valuable contract, it includes:Intrinsic value...
3. Neutral Strategy - Cross Combination (Strangle)
Straddle is commonly known as a saddle style, which refers to a combination of call and put with the same purchase price and expiration date. The exercise price is usually close to the current price.
The biggest advantage of this strategy: it doesn't judge the direction; it only requires large fluctuations. Fluctuations in the underlying stock are sufficient so that the profit of one side is greater than the cost of both sides.
The cross-portfolio strategy is that the risk is that the price of the underlying stock does not fluctuate enough to offset the cost of buying two options.
Stock prices often fluctuate greatly after the company releases its financial report. On Niubu, you can check the historical fluctuations of stocks you are interested in after the publication of financial reports, study, and analyze them.
How can I check the changes in the company's stock price after earnings reports?
Take Chaowei as an example. On the detailed quotation page, the small dot in the circle indicates “company action”. After the K line moves to the same day, you can see that day's financial report was released, and then click “View Today's Time-Share” that appears below the small dot, then the full K line for the day before, during, and after the market will appear below. As can be seen, after the earnings report was released after the market, the K-line went all the way up after the market, with an increase of 16%.
The picture on the right below is Meta (Facebook). After the financial report was released on February 2, the stock price plummeted 20%.
The publication of financial reports is an important day for a listed company. There are 4 earnings seasons every year, and every time it's a sniper's field for options users. The earnings press conference brought phased official news from the company, releasing the market's sentiment, either positive or pessimistic. Faced with this sentiment, the market will respond quickly, causing fluctuations in stock prices. Fluctuations are closely related to option prices. Three elements of options Before we begin to introduce options strategies for the earnings season, let's review the three factors that influence options: 1) Time: If other conditions are met, the closer to the date of exercise, the cheaper the option. The so-called “wear and tear” of options generally refers mainly to the decline in time value. As we said before, options are like insurance. The longer the insurance is insured, the more expensive it is. There are so many long nights and dreams. The longer it is until the expiration date, the more expensive it is. 2) The price of the underlying stock. For call, the lower the exercise price, the more expensive; for put, the higher the exercise price, the more expensive. The so-called “buy low and sell high” is difficult to achieve; that is, the more valuable it is, the more expensive the corresponding option. 3) Implied Volatility (IV): The higher the IV, the more expensive the options. The more likely the underlying stock is to fluctuate greatly, then the more expensive the options will be. It can be understood this way: the more it jumps up and down, the more unstable the trend, and the more opportunities there are for arbitrage, the more expensive the option price. So, what do you buy when you buy options? As mentioned in the previous introduction, buying options is tantamount to buying insurance. Let's be a little more professional today. If you think of an option as a valuable contract, it includes:Intrinsic value...
The publication of financial reports is an important day for a listed company. There are 4 earnings seasons every year, and every time it's a sniper's field for options users. The earnings press conference brought phased official news from the company, releasing the market's sentiment, either positive or pessimistic. Faced with this sentiment, the market will respond quickly, causing fluctuations in stock prices. Fluctuations are closely related to option prices. Three elements of options Before we begin to introduce options strategies for the earnings season, let's review the three factors that influence options: 1) Time: If other conditions are met, the closer to the date of exercise, the cheaper the option. The so-called “wear and tear” of options generally refers mainly to the decline in time value. As we said before, options are like insurance. The longer the insurance is insured, the more expensive it is. There are so many long nights and dreams. The longer it is until the expiration date, the more expensive it is. 2) The price of the underlying stock. For call, the lower the exercise price, the more expensive; for put, the higher the exercise price, the more expensive. The so-called “buy low and sell high” is difficult to achieve; that is, the more valuable it is, the more expensive the corresponding option. 3) Implied Volatility (IV): The higher the IV, the more expensive the options. The more likely the underlying stock is to fluctuate greatly, then the more expensive the options will be. It can be understood this way: the more it jumps up and down, the more unstable the trend, and the more opportunities there are for arbitrage, the more expensive the option price. So, what do you buy when you buy options? As mentioned in the previous introduction, buying options is tantamount to buying insurance. Let's be a little more professional today. If you think of an option as a valuable contract, it includes:Intrinsic value...
Going back to the operational level of options strategy, if we were to judge that after a company publishes financial reports, there will be large fluctuations; it may skyrocket, or it may plummet. Well, options players often use cross-style strategies or wide-span strategies.
The principle of cross-span and wide-span is the same. The difference from the cross-style is that a wide span type has a different buying price, but when a combination of calls and puts with the same expiration date, the exercise price is usually not included in the price. You can make a profit when the price breaks through a certain range (whether it rises or falls below), andBet on volatility，It is suitable for stocks where the price of the underlying stock fluctuates greatly. Typical examples are growth stocks and technology stocks.
In the image below, the left side is a span type, and the right side is a wide span type.
The publication of financial reports is an important day for a listed company. There are 4 earnings seasons every year, and every time it's a sniper's field for options users. The earnings press conference brought phased official news from the company, releasing the market's sentiment, either positive or pessimistic. Faced with this sentiment, the market will respond quickly, causing fluctuations in stock prices. Fluctuations are closely related to option prices. Three elements of options Before we begin to introduce options strategies for the earnings season, let's review the three factors that influence options: 1) Time: If other conditions are met, the closer to the date of exercise, the cheaper the option. The so-called “wear and tear” of options generally refers mainly to the decline in time value. As we said before, options are like insurance. The longer the insurance is insured, the more expensive it is. There are so many long nights and dreams. The longer it is until the expiration date, the more expensive it is. 2) The price of the underlying stock. For call, the lower the exercise price, the more expensive; for put, the higher the exercise price, the more expensive. The so-called “buy low and sell high” is difficult to achieve; that is, the more valuable it is, the more expensive the corresponding option. 3) Implied Volatility (IV): The higher the IV, the more expensive the options. The more likely the underlying stock is to fluctuate greatly, then the more expensive the options will be. It can be understood this way: the more it jumps up and down, the more unstable the trend, and the more opportunities there are for arbitrage, the more expensive the option price. So, what do you buy when you buy options? As mentioned in the previous introduction, buying options is tantamount to buying insurance. Let's be a little more professional today. If you think of an option as a valuable contract, it includes:Intrinsic value...
For example: Now it's March 9, March 11 (Friday), Futu will release financial reports. I expect large stock price fluctuations after the earnings report is released, but I don't know if it will rise or fall.
Click on Futu's options chain, go to the detailed pricing page for options that expire on March 18, then click Analyze to view the current volatility analysis. As can be seen, the volatility of options that expire on March 18 is much higher than that of the last month.
The publication of financial reports is an important day for a listed company. There are 4 earnings seasons every year, and every time it's a sniper's field for options users. The earnings press conference brought phased official news from the company, releasing the market's sentiment, either positive or pessimistic. Faced with this sentiment, the market will respond quickly, causing fluctuations in stock prices. Fluctuations are closely related to option prices. Three elements of options Before we begin to introduce options strategies for the earnings season, let's review the three factors that influence options: 1) Time: If other conditions are met, the closer to the date of exercise, the cheaper the option. The so-called “wear and tear” of options generally refers mainly to the decline in time value. As we said before, options are like insurance. The longer the insurance is insured, the more expensive it is. There are so many long nights and dreams. The longer it is until the expiration date, the more expensive it is. 2) The price of the underlying stock. For call, the lower the exercise price, the more expensive; for put, the higher the exercise price, the more expensive. The so-called “buy low and sell high” is difficult to achieve; that is, the more valuable it is, the more expensive the corresponding option. 3) Implied Volatility (IV): The higher the IV, the more expensive the options. The more likely the underlying stock is to fluctuate greatly, then the more expensive the options will be. It can be understood this way: the more it jumps up and down, the more unstable the trend, and the more opportunities there are for arbitrage, the more expensive the option price. So, what do you buy when you buy options? As mentioned in the previous introduction, buying options is tantamount to buying insurance. Let's be a little more professional today. If you think of an option as a valuable contract, it includes:Intrinsic value...
Click “Profit and Loss Analysis” next to “Volatility Analysis”, click “Combine” under “Option Profit and Loss Chart”, and select the neutral strategy: strangle. As you can see, a broad range of buyers' combinations has been put together. You can check the profit situation under different exercise prices by adjusting the target price according to your own predictions.
The publication of financial reports is an important day for a listed company. There are 4 earnings seasons every year, and every time it's a sniper's field for options users. The earnings press conference brought phased official news from the company, releasing the market's sentiment, either positive or pessimistic. Faced with this sentiment, the market will respond quickly, causing fluctuations in stock prices. Fluctuations are closely related to option prices. Three elements of options Before we begin to introduce options strategies for the earnings season, let's review the three factors that influence options: 1) Time: If other conditions are met, the closer to the date of exercise, the cheaper the option. The so-called “wear and tear” of options generally refers mainly to the decline in time value. As we said before, options are like insurance. The longer the insurance is insured, the more expensive it is. There are so many long nights and dreams. The longer it is until the expiration date, the more expensive it is. 2) The price of the underlying stock. For call, the lower the exercise price, the more expensive; for put, the higher the exercise price, the more expensive. The so-called “buy low and sell high” is difficult to achieve; that is, the more valuable it is, the more expensive the corresponding option. 3) Implied Volatility (IV): The higher the IV, the more expensive the options. The more likely the underlying stock is to fluctuate greatly, then the more expensive the options will be. It can be understood this way: the more it jumps up and down, the more unstable the trend, and the more opportunities there are for arbitrage, the more expensive the option price. So, what do you buy when you buy options? As mentioned in the previous introduction, buying options is tantamount to buying insurance. Let's be a little more professional today. If you think of an option as a valuable contract, it includes:Intrinsic value...
The combination pictured above is expected to be profitable if the stock price falls below $26.03, or above $38.47, in the week after the earnings report is released. The stock price is in the range of 26.03-38.47 US dollars. The biggest loss is the premium to buy these two options. It is estimated to be 397 US dollars.
The publication of financial reports is an important day for a listed company. There are 4 earnings seasons every year, and every time it's a sniper's field for options users. The earnings press conference brought phased official news from the company, releasing the market's sentiment, either positive or pessimistic. Faced with this sentiment, the market will respond quickly, causing fluctuations in stock prices. Fluctuations are closely related to option prices. Three elements of options Before we begin to introduce options strategies for the earnings season, let's review the three factors that influence options: 1) Time: If other conditions are met, the closer to the date of exercise, the cheaper the option. The so-called “wear and tear” of options generally refers mainly to the decline in time value. As we said before, options are like insurance. The longer the insurance is insured, the more expensive it is. There are so many long nights and dreams. The longer it is until the expiration date, the more expensive it is. 2) The price of the underlying stock. For call, the lower the exercise price, the more expensive; for put, the higher the exercise price, the more expensive. The so-called “buy low and sell high” is difficult to achieve; that is, the more valuable it is, the more expensive the corresponding option. 3) Implied Volatility (IV): The higher the IV, the more expensive the options. The more likely the underlying stock is to fluctuate greatly, then the more expensive the options will be. It can be understood this way: the more it jumps up and down, the more unstable the trend, and the more opportunities there are for arbitrage, the more expensive the option price. So, what do you buy when you buy options? As mentioned in the previous introduction, buying options is tantamount to buying insurance. Let's be a little more professional today. If you think of an option as a valuable contract, it includes:Intrinsic value...
How can the portfolio deposit be reduced?
The combination strategies mentioned above all have corresponding security deposit relief benefits. For details, please see:
[Good news] The option portfolio margin discount has been updated!
Simulated trading guide
Of course, as a newbie, I recommend going to simulated trading first to find out how the three elements of options change over time and stock prices.
Futu Niubu's simulated trading cannot simulate the exercise of power; it can only simulate cash delivery.
The operation is as follows: The first step is to access the option chain - find the target option - the small square button below - simulate trading
The publication of financial reports is an important day for a listed company. There are 4 earnings seasons every year, and every time it's a sniper's field for options users. The earnings press conference brought phased official news from the company, releasing the market's sentiment, either positive or pessimistic. Faced with this sentiment, the market will respond quickly, causing fluctuations in stock prices. Fluctuations are closely related to option prices. Three elements of options Before we begin to introduce options strategies for the earnings season, let's review the three factors that influence options: 1) Time: If other conditions are met, the closer to the date of exercise, the cheaper the option. The so-called “wear and tear” of options generally refers mainly to the decline in time value. As we said before, options are like insurance. The longer the insurance is insured, the more expensive it is. There are so many long nights and dreams. The longer it is until the expiration date, the more expensive it is. 2) The price of the underlying stock. For call, the lower the exercise price, the more expensive; for put, the higher the exercise price, the more expensive. The so-called “buy low and sell high” is difficult to achieve; that is, the more valuable it is, the more expensive the corresponding option. 3) Implied Volatility (IV): The higher the IV, the more expensive the options. The more likely the underlying stock is to fluctuate greatly, then the more expensive the options will be. It can be understood this way: the more it jumps up and down, the more unstable the trend, and the more opportunities there are for arbitrage, the more expensive the option price. So, what do you buy when you buy options? As mentioned in the previous introduction, buying options is tantamount to buying insurance. Let's be a little more professional today. If you think of an option as a valuable contract, it includes:Intrinsic value...
The publication of financial reports is an important day for a listed company. There are 4 earnings seasons every year, and every time it's a sniper's field for options users. The earnings press conference brought phased official news from the company, releasing the market's sentiment, either positive or pessimistic. Faced with this sentiment, the market will respond quickly, causing fluctuations in stock prices. Fluctuations are closely related to option prices. Three elements of options Before we begin to introduce options strategies for the earnings season, let's review the three factors that influence options: 1) Time: If other conditions are met, the closer to the date of exercise, the cheaper the option. The so-called “wear and tear” of options generally refers mainly to the decline in time value. As we said before, options are like insurance. The longer the insurance is insured, the more expensive it is. There are so many long nights and dreams. The longer it is until the expiration date, the more expensive it is. 2) The price of the underlying stock. For call, the lower the exercise price, the more expensive; for put, the higher the exercise price, the more expensive. The so-called “buy low and sell high” is difficult to achieve; that is, the more valuable it is, the more expensive the corresponding option. 3) Implied Volatility (IV): The higher the IV, the more expensive the options. The more likely the underlying stock is to fluctuate greatly, then the more expensive the options will be. It can be understood this way: the more it jumps up and down, the more unstable the trend, and the more opportunities there are for arbitrage, the more expensive the option price. So, what do you buy when you buy options? As mentioned in the previous introduction, buying options is tantamount to buying insurance. Let's be a little more professional today. If you think of an option as a valuable contract, it includes:Intrinsic value...
The publication of financial reports is an important day for a listed company. There are 4 earnings seasons every year, and every time it's a sniper's field for options users. The earnings press conference brought phased official news from the company, releasing the market's sentiment, either positive or pessimistic. Faced with this sentiment, the market will respond quickly, causing fluctuations in stock prices. Fluctuations are closely related to option prices. Three elements of options Before we begin to introduce options strategies for the earnings season, let's review the three factors that influence options: 1) Time: If other conditions are met, the closer to the date of exercise, the cheaper the option. The so-called “wear and tear” of options generally refers mainly to the decline in time value. As we said before, options are like insurance. The longer the insurance is insured, the more expensive it is. There are so many long nights and dreams. The longer it is until the expiration date, the more expensive it is. 2) The price of the underlying stock. For call, the lower the exercise price, the more expensive; for put, the higher the exercise price, the more expensive. The so-called “buy low and sell high” is difficult to achieve; that is, the more valuable it is, the more expensive the corresponding option. 3) Implied Volatility (IV): The higher the IV, the more expensive the options. The more likely the underlying stock is to fluctuate greatly, then the more expensive the options will be. It can be understood this way: the more it jumps up and down, the more unstable the trend, and the more opportunities there are for arbitrage, the more expensive the option price. So, what do you buy when you buy options? As mentioned in the previous introduction, buying options is tantamount to buying insurance. Let's be a little more professional today. If you think of an option as a valuable contract, it includes:Intrinsic value...
The publication of financial reports is an important day for a listed company. There are 4 earnings seasons every year, and every time it's a sniper's field for options users. The earnings press conference brought phased official news from the company, releasing the market's sentiment, either positive or pessimistic. Faced with this sentiment, the market will respond quickly, causing fluctuations in stock prices. Fluctuations are closely related to option prices. Three elements of options Before we begin to introduce options strategies for the earnings season, let's review the three factors that influence options: 1) Time: If other conditions are met, the closer to the date of exercise, the cheaper the option. The so-called “wear and tear” of options generally refers mainly to the decline in time value. As we said before, options are like insurance. The longer the insurance is insured, the more expensive it is. There are so many long nights and dreams. The longer it is until the expiration date, the more expensive it is. 2) The price of the underlying stock. For call, the lower the exercise price, the more expensive; for put, the higher the exercise price, the more expensive. The so-called “buy low and sell high” is difficult to achieve; that is, the more valuable it is, the more expensive the corresponding option. 3) Implied Volatility (IV): The higher the IV, the more expensive the options. The more likely the underlying stock is to fluctuate greatly, then the more expensive the options will be. It can be understood this way: the more it jumps up and down, the more unstable the trend, and the more opportunities there are for arbitrage, the more expensive the option price. So, what do you buy when you buy options? As mentioned in the previous introduction, buying options is tantamount to buying insurance. Let's be a little more professional today. If you think of an option as a valuable contract, it includes:Intrinsic value...
Friends, let's cheer together because
The publication of financial reports is an important day for a listed company. There are 4 earnings seasons every year, and every time it's a sniper's field for options users. The earnings press conference brought phased official news from the company, releasing the market's sentiment, either positive or pessimistic. Faced with this sentiment, the market will respond quickly, causing fluctuations in stock prices. Fluctuations are closely related to option prices. Three elements of options Before we begin to introduce options strategies for the earnings season, let's review the three factors that influence options: 1) Time: If other conditions are met, the closer to the date of exercise, the cheaper the option. The so-called “wear and tear” of options generally refers mainly to the decline in time value. As we said before, options are like insurance. The longer the insurance is insured, the more expensive it is. There are so many long nights and dreams. The longer it is until the expiration date, the more expensive it is. 2) The price of the underlying stock. For call, the lower the exercise price, the more expensive; for put, the higher the exercise price, the more expensive. The so-called “buy low and sell high” is difficult to achieve; that is, the more valuable it is, the more expensive the corresponding option. 3) Implied Volatility (IV): The higher the IV, the more expensive the options. The more likely the underlying stock is to fluctuate greatly, then the more expensive the options will be. It can be understood this way: the more it jumps up and down, the more unstable the trend, and the more opportunities there are for arbitrage, the more expensive the option price. So, what do you buy when you buy options? As mentioned in the previous introduction, buying options is tantamount to buying insurance. Let's be a little more professional today. If you think of an option as a valuable contract, it includes:Intrinsic value...
Risk Alerts & Disclaimers
The above content is not and should not be considered investment advice, nor does it constitute an offer or solicitation of any offer to subscribe, trade or redeem any investment product. Option contracts are derivatives and are not suitable for all investors. You should carefully measure your suitability to participate in such transactions based on your own investment experience, investment goals, financial resources and other relevant conditions.
The risk of loss when trading options contracts can be extremely high. In some cases, you may lose more than the amount of your initial deposit. Even if you set backup instructions, such as “stop corrosion” or “limit price” instructions, you may not be able to avoid losses. Market conditions may make such instructions unenforceable. You may be asked to deposit an additional security deposit within a short period of time. If the required amount is not provided within the specified time, your open positions may be closed. However, you are still responsible for any shortfall in your account as a result. Therefore, you should research and understand index options before trading, and carefully consider whether such trading is suitable for you based on your financial situation and investment goals. If you trade options, you should be familiar with the procedures for exercising options and when they expire, as well as your rights and responsibilities when exercising options and when they expire.
This statement does not cover all risks of trading options and other important matters. As far as risk is concerned, you should first understand the nature of the contract to be entered into (and the relevant contractual relationship) and the extent of risk you will have to bear in this regard before entering into any of the above transactions.
Risk Disclaimer: The above content only represents the author's view. It does not represent any position or investment advice of Futu. Futu makes no representation or warranty.Read more
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