Here is a couple of the trades that I am looking at for this week.

New Trade on DIA

Right now I am in positions on XLV, XLP, EWZ, and DIA.

I have a long strangle hedge on each of these positions (as per the masterclass). '

If you wanted to see a list of the top ETFs for option selling right now, here it is:

Best ETFs for option selling scan

DIA is at the top of the list, so here's the trade I would place on it now based on the ETF Premium strategy

Step 1: sell a weekly delta 20 strangle

Strikes for short strangle

This is the exact trade I'd place right now. If you don't open this email until later in the week then I would set my expiration for next week. Remember, this is just a systematic way to monetize the risk premium. I am selling weekly strangles and rolling them to the next week on Fridays. Boring stuff, but it works.

Step 2: Buy a hedge

The hedge I'm considering

Once you have the short strangle, consider holding a hedge on the position too. If you want to have the hedge, here's the strikes I'd look at:

Note: if you buy the hedge, the margin requirement gets cut down by a lot.

Another benefit of the hedge is that you only need to buy it once for multiple weeks. since it's on a longer DTE, you don't need to close it out at the end of each week. Transaction costs, saved!

The whole trade cycle looks something like this:

Think of the trade as a month long cycle

Pretty simple. Not thrilling. But at the end of the day.. number in account go up. So who cares?

Earnings Strategy

IMPORTANT: If you haven't seen, I'm posting videos ~3x a week about earnings trading. Make sure you check them out on our YouTube.

There's around 50 trades this week that we could potentially take. Here's a few that are on my list:

• ZM
• FUTU
• BIDU
• MDT

and many more.

Earnings trades for the week

The story for FUTU earnings

Here's a trade for today that we can analyze together. Whenever I am doing an earnings analysis I like to piece the data together into a story that helps me see the "picture" of the risk premium around the event.

Key data for FUTU

https://preview.redd.it/q2bnb1cpkp1e1.png?width=981&format=png&auto=webp&s=37ad2522f1f26c55b8c7ed3984738be6c2ce334c

• FUTU has earnings today tomorrow before the open, so I'll be looking to place a trade in a couple hours.
• The implied move is almost 9%, which is huge. This is roughly the same as it normally is, which means the markets assumption on move sizes is roughly the same as usual.
• On average, the stock only moves 4.58% the following day, and it jumps about 3.5% first thing in the morning. 87.5% of the time the move is less than implied (over the last 4 years).
• The most it's moved is 18.56%, so i will probably use this as a reference point for stress testing the position.
• The average straddle PnL is almost 20% as well, which is amazing. It's a good sign that on average the risk premium is quite pronounced.

FUTU Backtest

https://preview.redd.it/gp82t25qkp1e1.png?width=945&format=png&auto=webp&s=38569d8baff3a45124deb0b540b8c7b495ac2e7d

This backtest performance is looking really good. Line go up and to the right. Profit??

This is basically what we want to see. Many small winners, occasional losers.

How much does it jump in the morning

https://preview.redd.it/8ccihgutkp1e1.png?width=960&format=png&auto=webp&s=dfad194cc196148546e9f0790385b14f34a21c26

Every event in the last 4 years has seen a jump smaller than the implied move. We love to see it! A great sign that the risk premium is there for us.

Implied move tracking

https://preview.redd.it/x5qw0a1tkp1e1.png?width=961&format=png&auto=webp&s=e6bc7fd0d45c5dfcb0cb72046f46e1d463251399

The current implied move is pretty much right in line with the average. Around earnings over the last year it's always seemed to get to this level and resulted in a profitable trade, so it looks good to me!

Trade structure I'm going with

I need to wait until the end of the day to see what the option chain looks like, but I will probably be selling tails again (delta 15 - delta 20 strangles)

Here's how it's looking right now the strikes I'm looking at:

https://preview.redd.it/ehx8vorxkp1e1.png?width=1115&format=png&auto=webp&s=6fbd7ee8202d20e5fe6fba1979b3815431a8661e

This is what I am going to look to sell if things stay the same by market close. If not, I'll adjust the strikes to be roughly the same delta on each side (around 18 delta).

Keep in mind that I will be doing this across multiple tickers today, not just this one. That is the most important part about trading earnings, getting enough volume of trades on that you have good diversification.

Feel free to share you analysis or other trades you are looking at. GL today everyone :)

Learning resources:

How to run ETF strategy

How to run earnings strategy

Case study - making $250k trading earnings