This video discusses the potential of buying strangles and straddles around earnings and attacked this issue head on.
The point of this Market Measure is to finally put to rest the question, can you buy options (knowing the number), can you make money?
The study: Buy a Straddle and 1 Standard Deviation Strangle 14 days prior to earnings. They looked at $TSLA, $LNKD, $NFLX, $AAPL, and $GOOG, for the past earning cycles. Then closed them the night before earnings.
The result? The P/L on Straddles was -$13,235 and 1 SD Strangle -$11,848. Straddle 2/20 wins and the strangle 0/20 wins???? Are you kidding? And this is knowing exactly where the price settles after the earnings announcement. You lose 90-100% of the time. How do the “Pros” sell this to the public?
So I suspect why JP Morgan, and others are telling you to buy premium before earnings, I suspect they are selling premium (as we should be and do).
Great study to prove what you’re being told by the mainstream media is probably not only wrong, but should be criminal!!!
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