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Podcast: Options Boot Camp
Episode: Options Bootcamp 16: Avoid Earnings Pitfalls with Options
Description: Options Drills: How to play earnings through options plays. There are two basic approaches to earnings trading: long premium and short premium. Long Premium - PROS: Advantageous because you essentially receive free or dramatically reduced gamma with little decay in the weeks leading up to earnings. CONS: All of that decay comes out, and more, after the announcement. Also, much of the movement in the underlying occurs after-hours and is unavailable to options traders. Short Premium - PROS: Higher probability of success, need a substantial move post-earnings to lose money. CONS: Doesn't collect decay until earnings event, potentially...