Options Trade Ideas (Volatility Rush Strategy)

The basic option trade idea is to buy an at-the-money straddle while the options premium is cheap.

In assessing this trade, you need to do your homework to ensure you are not paying too much for the straddle.

As the earnings date approaches, the implied volatility (IV) should increase, resulting in greater price movement.

However, be aware that you should close your position before the announcement comes out in order to maximize your profit potential. That’s because once earnings are released, IV will fall dramatically, which will greatly reduce your opportunity to profit on the trade.

The stocks (with Weekly Options) below are announcing earnings in next few weeks. Our proprietary volatility algorithm suggests these stocks are likely to experience high volatility as earnings day approaches.