♟ How to Trade Overnight Earnings: +200% Winner

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Image of a diagram of a Long Strangle

"By owning a strangle, you can profit if your stock swings sharply in price - either up or down."

Bryan Bottarelli, Head Trade Tactician, Monument Traders Alliance

Bryan Bottarelli

A lot of new members all tend to ask the same question...

What is an overnight earnings strangle?

To me, it's one of the most powerful strategies we use at Monument Trader's Alliance.

Today, I'll give you a clear and concise breakdown of how this trading tactic works - so you can start incorporating this profitable method into your daily trading arsenal.

To start, the primary element of the strategy involves an options trading position called a "strangle."

A strangle is a trading strategy that's used if you think the underlying security will experience a large price movement in the near future - but, you're unsure of the direction.

In other words...

Say a stock that you happen like (in this case, let's use Home Depot) is about to report earnings.

You think a strong earnings report could shoot HD's stocks price up +$10.00.

But on the flipside, a weak earnings report could push HD's stock price down -$10.00.

You're unclear as to the direction of Home Depot...

But either way, you have a feeling that HD could make a big move.

In cases like this, a strangle trade would be the perfect way to trade HD - because this options strategy would be profitable no matter if HD makes a big move up - or makes a big move down.

As long as HD makes a sharp move in price, a strangle trade will win.

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To enter into a strangle trade on Home Depot, you'd enter two options: You'd buy a HD call option - and you'd also buy a HD put option - each with different strike prices - but both with the same expiration date.

Here's how Investopedia displays is graphically...

Image from Investopedia showing the definition of a strangle trade

What I like most about this trade is that the total risk is limited... while the total upside is unlimited.

For example, the call option has theoretically unlimited upside, while the put option can profit if the underlying asset falls.

Your total risk on this trade is only premium that you paid for the two options. Nothing more.

To calculate your break-even price, simply take the entire cost of the strangle (the call price plus the put price) and add it to your call strike. That's your break-even on the upside.

Then, take the entire cost of the strangle - and subtract that from your put strike. That's your break-even on the downside.

As long as your stock moves ABOVE or BELOW either of these values, your strangle trade will be profitable.

How can a strangle trade lose money? That's simple. If the stock that you think is going to make a big move remains flat... or does not move higher or low enough - then your strangle trade will lose money.

But that's the key takeaway of my Overnight Earnings Strategy...

To avoid the risk of a stock NOT making a big move... I enter into these strangle positions a day BEFORE a stock is set to make an earnings announcement.

After all...

Earnings announcements tend to ignite the biggest one-day moves on stocks - up or down. So, adding a strangle position just before a big earnings announcement ignites a big stock move represents one of the smartest, and highest-performing strategies.



As a quick review...

A strangle is an options strategy that involves holding both a call and a put on the same underlying asset. The trade is best initiated one day before an earnings release - which tend to be the trigger catalysts for dramatically moving a stock in either direction. By owning a strangle, you can profit if your stock swings sharply in price - either up or down.

I call these trades... Overnight Earnings Trades.

All of my Overnight Earnings trades are posted - in real time - inside The War Room. This past Tuesday, as shares of Disney (DIS) fell, we used this exact strategy to lock in a +36% winner, overnight. If you'd like to start receiving these trades - and hitting overnight winners - then you're invited to join us inside The War Room.

Click HERE to Enter The Room!

P.S. We also used this strategy yesterday to hit a MONSTER overnight winner on Trip Advisor (TRIP). As TRIP got crushed on earnings yesterday, War Room members made over +200% overnight!

Just look at this crushing move - and imagine how you'd feel if you made 200% as the stock fell:

A Triple-Digit Winner on TRIP

Here's what War Room members said about this massive overnight winner:

"In @ $2.30 out at $7.60 , up 230% (used the wrong date, D10 cause I made the trade while playing golf :)" - Grahamtwo

"Jackpot Winner! Way to go, Bryan!!! I sold Call Put On Tuesday for $135. 51. I held onto Put for today's fantastic ride to sell at $759.51. I could have held longer for a rocket ride, but I have no complaints here. Thanks a mill, BB!!!" - Jeticool

"Out at 8.24. Thank you BB. If my math is correct it was a 519% increase for me. in @ 1.33 out @8.24." - coach

If you're ready to start hitting these overnight winners - then you're invited to join us inside The War Room.

Click HERE to Enter The Room!


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