Hi! Straight to the point.
I have been testing out a new strategy for a week, where I short options strangle the day before earnings come out, and buy back after the market has opened again and earnings have come out (IV Crush). This has worked well since IV is racing down after earnings, out of a total of 14 trades, only 1 of them has been a loss. Have any of you in here experience with this strategy and could give me some tips. I also have the following questions:
1. What amount of open interest and volume should there be on the options to be sure that I can buy them back after shorting them.
2. Why do option prices sometimes rise after earnings when Implied Volatility rages down?
I have been testing out a new strategy for a week, where I short options strangle the day before earnings come out, and buy back after the market has opened again and earnings have come out (IV Crush). This has worked well since IV is racing down after earnings, out of a total of 14 trades, only 1 of them has been a loss. Have any of you in here experience with this strategy and could give me some tips. I also have the following questions:
1. What amount of open interest and volume should there be on the options to be sure that I can buy them back after shorting them.
2. Why do option prices sometimes rise after earnings when Implied Volatility rages down?