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I'm in love with Earnings plays because you play them overnight, and the aspect of "fast" success really does it for me.
On Tasty Trade, they presented a new Market Measure Sunny Side Up
which intrigues me. Watch the video and see for yourself.
First they did a 3 year study: the first test which loses money, and then by simply using the correct probability, the same strategy becomes a winner~!
In a nutshell, using large, high volaility stocks (likes GOOG, NFLX, PCLN, etc.) the night before earnings,
1. You buy a debit spread. Buy one leg in the money, sell one leg out of the money. You will pay for a debit for that spread. (for example $5.00).
2. You go to your option chain and find an out of the money Call that has an 84% probability of being OTM, (or 16% probability of being ITM at expiration).
3. IF THE CREDIT YOU RECEIVE FOR #2 IS EQUAL OR MORE THAN THE DEBIT YOU PAY IN #1, THEN DO THE TRADE. (In my example, the credit would need to be $5.00).
There is a very high success rate in doing this trade IF YOU MAKE SURE THE SHORT NAKED CALL (#2) has an 84% probability of being out of the money.
I'm going to paper trade it a few times just to see for myself.