Unofficial Earnings Play

Unofficial Earnings Play

Hello Smart Option Sellers! As mentioned previously, I am going to offer up unofficial opportunities to capitalize on the explosive moves that can occur after earnings results are announced. Many times, the stock will make larger moves than expected, and the best way to play these kinds of moves are by buying options - something which is not the main focus of The Smart Option Seller, and certainly something that I'm not a huge fan of. But, when done properly, you can give yourself a decent chance of making a profit. Gilead Sciences (GILD) One of the best types of stocks to take your shot is with biopharmaceuticals such as GILD, which releases earnings after the bell today. Biopharmas are always prone to big jumps due to the fact that the FDA is always either approving or rejecting their current drugs or ones in the pipeline. And, the earnings can reflect the results of those decisions on their bottomline. Hence, earnings can lead to large jumps in either direction. With GILD stock currently at $68.60 per share, it has been in a continual downtrend since last June 2016, where it topped out at $123 per share. It's been declining ever since. Does this mean it will continue to fall, or have we seen the bottom? For our purposes, it doesn't matter, because we need to cover ourselves for a move in either direction. I always say earnings are a crapshoot because I've seen stocks move in unexpected ways even if they beat analyst's expectations. So if you're going to play the game of buying options before earnings, you have to buy both call options and put options. One factor to keep in mind - the lower the stock goes, the less dramatic the potential gap mo