Stock Option Trading News

Using Weekly Call Options and Weekly Put Options for a Stock Earnings Event

Each quarter we get the barrage of earnings announcements and go through all the earnings figures of each company. Earnings announcements can cause wide swings in stock prices. Positive earnings events can send a stock into a gap up in price and conversely negative or disappointing earnings can result in a stock price sell off. The question then can be asked, “Is there a way to take advantage of these swings in stock price as a result of an earnings announcement?” The advent of weekly options has made it easier to play earnings announcements. Options have a time value depending on how much time there is to expiration of the option. By using very short time frames for option speculation, this time value can be made very small. Since we know when earnings will be announced and the price reaction to the announcement happens over a very short time, weekly…

Stock Option Investment Advice

Locking In Gains on a Long Call Option Position

You have probably heard about using put options to lock in a gain on a stock that has moved up in price. This is also one of the ways investors can lock in gains on a long call position. We received an email from a PowerOptions customer with the following details: “Bought AUY Jan 20 2017, $1.50 CALL @ $1.19 a long time ago.  Current price of the CALL is $2.85. I don’t own the stock itself. How do I lock in the profit but stay with the position, as I think that gold has a bright future? The only idea that crossed my mind is very simplistic: buy a protective PUT.  For example, pay $1.41 for AUY Oct 21 2016 $5.50 PUT.” Let’s break down this position: Yamana Gold Inc. (AUY) currently at $4.21