Unofficial Earnings Play

Unofficial Earnings Play

Hello Smart Option Sellers! Target Corp. (TGT) We closed out our TGT put-sell position successfully the other day due to the fact that they are releasing earnings tomorrow before the open. This was done out of caution knowing that the stock dropped about $9 per share after last quarter's announcement (which could've potentially put our built-up profits in jeopardy), and due to the fact that many retailers are getting walloped at the moment. It never hurts to take a profit, and I would've hated to see it slip away. Now, should we take another speculative position today by buying cheap options on TGT? It worked successfully for us the last time. When trading these earnings plays, I've mentioned that you need to find stocks that have a history of large gap moves after the results are released. TGT certainly has had its fair share of large moves over the past year, but you still need to be able to find cheap options to play it right. No sense in doing these trades if you're not getting a bargain. What do I consider cheap options? Anything price between $.05 - $.20 per contract. And, you should buy them within the radius of which the stock is capable of moving. No sense in buying an option $5 away from the stock price if the stock has a history of only moving $2 after earnings? Dig what I'm saying? One of the downsides here is that the more a stock gaps higher or lower after earnings, the more the market will come to expect it. And that in turn will make it harder to find cheap options to buy that are worthwhile. So, knowing that, it might be a bit harder to profit on this play today. But, I'll put it out there for anyone who's willing to take a shot.