Your 3-Step approach to profit from earnings

[Archives]( Live]( [Twitter]( [Youtube]( [Instagram]( [Discord]( [Tiktok]( [Only 38 cents to Get In]( The top AI trade of 2023! [See why here]( MAIN STORY Profit from Earnings with this 3-Step Approach By Tom Gentile. Dear Reader The majority of S&P 500 member companies have released earnings from Q2, 2022 – and although most companies reported EPS above estimates, they lag behind both 5 year and 10-year averages. And looking forward, analysts expect S&P 500 earnings to get worse before improving. The vice president and senior earnings analyst at FactSet, John Butters, wrote, “In aggregate, companies are reporting earnings 0.6% above estimates,” which marks the lowest surprise percentage reported by the index since 2008. Additionally, as Butters noted, analysts are projecting earnings growth of 3.4% in Q3 this year before improving to 10.5% by fourth quarter. Which means if earnings are going to deteriorate further, we can expect a shake up in market volatility, and you know what that means… a spike in options implied volatility. And as you well know, I love heightened levels of volatility. It’s the stuff option traders long for. So, let me show you how to use the 3-step trading approach to profit from turbo-charged implied volatility as we wind down earnings season this month. Implied Volatility (IV) – The Secret Sauce That Boosts Option Premiums My Vega Burst Traders locked in profits from a Straddle trade on Alibaba Group (NYSE: BABA) recently, so I’ll show you how we used the 3-step approach to profit. I’ve provided a chart below to highlight the 3-step approach to trading IV. Before I get into it though, let me first quickly explain what an options Straddle trade is. It’s fairly simple, instead of buying a single call option, you will also buy the same strike and expiration put option – which, when combined, creates a Straddle trade. The trade set up is quite simple but be mindful that you’re buying two options instead of a single one, which essentially can double the invested dollars for the trade. Now, there is some sanity to the madness of buying both the bullish call and bearish put options simultaneously. The reason we’re buying both the call and put option is because we don’t want to worry about which direction the stock’s price moves… so long as it moves either up or down. With the call option, we can profit from a strong upward move; and, with the put option, we can profit with a strong move downward as well. The trade my subscribers took was a Feb 3, 2023, $120 Call/Put Straddle. Now let’s look at the chart above, which illustrates what’s happening in the 3-step process. It’s this approach that you can follow to profit with Straddles. Step 1 – Enter the trade ahead of earnings and before the IV rises. If you look at the red trend line in the chart, you can see implied volatility rising upwards during Step 1. This rising IV tells us that call and put options are becoming inflated, which is really good for option buyers. Step 2 – Watch for a strong price movement in either direction. In the case of our straddle, the stock was moving quite sideways before its big down move, but that’s exactly what we want to happen for Step 2. Once price has moved, and remember it must move or we'll have to exit early, we’re ready to move on to step 3 in the process. Step 3 – Exit the trade before implied volatility is drained from our options. If you notice the red line in the chart, immediately after the price of the stock fell, the implied volatility started falling hard… it occurred right after the event. This simply means that option premium (value) is being drawn out of the options at top speed. I love rising IV for a reason… because it inflates option premiums. So, we certainly don’t want to be holding long options as their inflated market values are drained due to crashing implied volatility. It’s a swift way to lose money in option trading. There is a right way and a wrong way to go about option trading around earnings season, and, although most stocks in the S&P 500 have reported, and earnings are winding down, there are still opportunities available. My AI-driven software, Brutus, continually looks for opportunities. It will tell us just when those opportunities are approaching, and it’ll give us exact entry and exit dates along with the expected amount of turbo-charged IV we could experience in the trade. So, be sure to tune in with me on [Money Morning LIVE]( each Monday through Wednesday to find out which opportunities are knocking on your door. Until next time, Tom Gentile America's #1 Pattern Trader Join Tom each Monday through Wednesday at 12:00 p.m. ET as he discusses a range of strategies that can make money in a strained market environment. Did you miss the Live session? Watch Tom’s replays!   FEATURED ARTICLES [The Rally Won't Last - Here's What to do.]( [This Bear Market Rally Could Prompt a 2001-style Crash]( [Tap Into Some of the Biggest Profits in the Market]( Garrett {NAME} spent 18 months poring over the data. The results are staggering – he’s seen gains like 442% in two days… 800% in four days… 1,300% in seven days… and this is just the tip of the iceberg. [See the full results here.](   GET STARTED [Options 101: The Easiest Options Guide You’ll Ever Read]( With anything and everything you’ll ever need to know about trading options, this is the best guide to making money in the markets you can get. [Straddles – How to profit up or down!]( Is there a way to trade options regardless of market direction? The answer is YES! Straddle trading takes the guess work out. Straddles can profit if the stock’s price rises OR falls on speculation. [Earnings: The IV Crush]( Trading options is a zero-sum game, meaning there will always be a winner and a loser on either side of a trade. Trading through an earnings report and losing in spite of the fact that the underlying stock price went in your intended direction can feel like getting stung by the biggest bee in the hive – Ouch! There is a right way to trade earnings. [The All-in-One Chart]( Welcome to my guide on the All-in-One Chart. The charting tools are made available for you to utilize in Tom’s Option’s Tools. My All-in-One Chart is made up of several components to help evaluate charts. Although there are many other factors involved in decisions regarding trades, chart analysis is a part of the process. [How to set up a Microcurrency Account]( Currencies make up the biggest market in the world today. In fact, every single day, up to $6.6 trillion is traded in the currency market. But there’s something extraordinary happening in this massive global market… It’s all hidden in a tiny offshoot that’s helping regular, everyday Americans become rich in the blink of an eye. They’re called microcurrencies – and it’s your turn to take advantage of these major moneymakers by setting up your own Microcurrency trading account.   CASH COURSE For the first time ever, I’m letting a small amount of new readers get 100% free access to my Cash Course. This cornerstone course will show you – in just seven simple steps — everything you need to know about trading options. Plus, you’ll learn how to make the perfect trades using the same methods I’ve used to train over 300,000 readers. So get ready – I’m about to show you how to cash in on any market – whether it’s up, down, or sideways. 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