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Moomoo feature hunt: Earnings season options trading guide
What is Moomoo Feature Hunt?
Welcome to Moomoo Feature Hunt, where we guide you through the features of our platform, and you'll get the chance to earn rewards by sharing your insights and experiences.
Earnings season often brings heightened market volatility, presenting a mix of challenges and opportunities for investors. For options traders, it's also an opportunity to capture potential gains.
Options can not only capture gains from volatility but also mitigate investment risks. If managed properly, options allow traders to leverage a smaller amount of capital to magnify profits from earnings-driven volatility. They can also reduce downside exposure if earnings disappoint.
Ⅰ. Three practical options strategies
With earnings season upon us, how can traders secure more profits? What innovative strategies can leverage the power of options?
Today, we'll explore three practical options strategies for the earnings period.
(1) Bull Call Spread: expect a limited increase in the underlying asset price
Suppose stock TSLA is trading at US$176.880, and Bob expects it will go up to US$190 after its earnings release.
In such a case, Bob conducts a bull call spread:
Open Position:
Based on the current stock price, Bob buys a Call 1 at US$6.3 with a strike price of US$175;
Based on the predicted price, Bob sells a Call 2 at US$1.07 with a strike price of US$190.
Hence, Total Cost of Bull Call Spread = Net Premium Paid Per Share * Multiplier * Contract Size = ($6.3-$1.07) * 100 * 1 = US$523.
(2) Short Put: expect to acquire the underlying stock at a lower price
Suppose the current stock price of TSLA is US$176.880, and Bob wants to buy the stock at a lower price as he believes it would drop after the earnings report release.
In such a case, Bob conducts a short put:
Sell to Open:
Bob sells a put of TSLA at US$1.2 with a strike price of US$165 (his psychological price).
Hence, the total premium gained = US$120
3. Long Straddle: strive to make profits from price movement regardless of its direction
Suppose the current stock price of TSLA is US$176.880, and Bob expects the stock price to fluctuate significantly on that day, but he is unsure of the direction.
In such a case, Bob conducts a long straddle:
Open the Position:
The strike price of a long straddle should be at-the-money or as close to it as possible, as the strategy seeks to profit from a strong move in either direction.
Bob buys a call at US$6.3 with a strike price of US$175 and buys a put at US$4.15 with a strike price of US$175.
Hence, Total Cost of Long Straddle = (US$6.3 + US$4.15) * 1 * 100 = US$1045.
The Upper Breakeven Point = Strike Price + Net Premium Paid Per Share = US$175 + （US$6.3 + US$4.15）= US$185.45.
The Lower Breakeven Point = Strike Price - Net Premium Paid Per Share = US$175 - (US$6.3 + US$4.15) = US$164.550.
Still wanna learn more specific strategies? Please keep reading more examples>>>
Ⅱ. Effective trading instruments with moomoo
In such times, clear thinking and effective trading instruments are crucial. Let's unpack how these innovative tools can seamlessly integrate into your earnings season trading for more informed decision-making.
(1) Unlock potential earnings season opportunities with Upcoming Earnings feature!
Earnings reports often bring big price swings. Use this feature to spot companies about to release earnings and consider trading the potential volatility. Effortlessly find stocks with upcoming earnings, view their key metrics, such as market cap, options volume, and IV rank, and make informed decisions – all in one place.
(2) Making options user-friendly for traders of all levels with Options Price Calculator
With the practical Options Price Calculator available on moomoo, you can easily adjust these parameters to gauge future prices without complex calculations. This tool visualizes the results for quick reference, making it user-friendly for traders of all levels.
(3) Leveraging option analysis features to make more informed investment decisions
The P/L Analysis tool visualizes the maximum theoretical profit/loss and the breakeven point for your strategies, allowing you to assess risks more easily.
Volatility Analysis provides insights into how the current implied volatility (IV) stacks up against historical highs and lows. This can be particularly useful in helping traders to tailor their strategies to the prevailing volatility environment.
(4) Optimize Your Trades with Bracket Orders for Automatic Management
New investors might find the array of order types daunting at first glance. There are eight order options available for opening and closing positions. And there are three specific order types that automatically close your open position when predefined conditions are met.
With limited orders, you can get in just right; market orders help you snap up trades quickly, and those smart stop-loss and take-profit orders let you tackle market swings with confidence.
Ⅲ. How are mooers optimizing their portfolios with options strategies?
Here's a closer look at how some of the mooers navigated the complexities of the market, exploring the nuances of options trading during this eventful period.
Look at the short sale data of DJT, you'll notice an increase in short interest that surpasses the levels seen in March when DJT was trading at its peak of $70. This indicates that more investors are currently betting on a decline in the stock price, with sentiment now even more bearish than it was in March.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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