“Size The Move, Don’t Time The Move.” – My Edge Over The Market

Options gives the advantage of leverage at the consequence of timing the move.

If options is about timing the move than earning's presents the move the next day, eliminating the need to time the move which is the most difficult part of options imo. The only to-do is size the move.

• Using neutral structures and suggested implied move can begin "sizing the move"
• ADBE suggested implied move is 7.6%, past two quarters is 13%/14%
• On Thursday will place double calendar 8% out, diagonal iron condor 12.5% out

Now I've sized the move, because the past two quarters were exceptional have accounted for possible aggressive move using two sets of spreads.

Don't want to overshoot and get smaller move, don't want to undershoot and get bigger move. These two spreads at different ranges should capture the quick directional move now. The only enemy is IV crush so really need a company which has drastically lower IV in the long legs, without going too much further out in time.

There's 3 rules which must be followed for this work:

1. The IV in long legs needs to be under 60%, buying further out in time reduces IV but raises cost so need to shop around looking for the least amount of IV to cost ratio, for ADBE is two weeks out see IV example.
2. Company must report Thursday after-hours so IV crush & expiration completely decay the short legs, any would-be leftover premium works against the position so ER's happening sooner in the week work much less effectively. We want to crush the disproportionate IV entirely in one day.
3. Absolutely needs to have open interest/volume.

IV EXAMPLE: ADBE's following week of earning's has 58% IV, 2nd week 48% IV, 3rd week 45% IV. I'd choose the 2nd week out, paying just a little more to avoid most of the IV crush. The 3rd week offers just slight reduction of IV for a much bigger jump in cost so it's a pass.

CONCLUSION: There's only select amount of companies which meet this criteria, the trade is only possible on earning's, so this very much requires waiting for a set-up. The returns are about 130%-200% of the original debt paid. It's basically waiting for a Mag 7, TSM, ADBE, AVGO, etc.. type of company to report because otherwise the criteria will not be met, the move becomes harder to size and the IV crush becomes lethal. This is my strategy for earning's which think gives me an edge.