How to do Earnings Trade

How To Trade during Earnings Season

1. Go to Result Calendar Page

2. Find the stock and look for Market Sentiment, Strong/Weak/SR Levels. Like as shown in below image. ex for APOLLOHOSP, Resistance was  1171, Weak Zone was 1113 and Market Sentiment was Neutral and its above all Moving Averages, so we can say that, its bullish sign but Market Sentiment is towards Neutral side, similarly for CESC, its totally reverse scenario, Sentiment is almost Strong Sell, one can say it is bearish. below is the screenshot from 14/11/2018 at EOD.

3. Go to our Stock Option Screener and check the script ()

4. Option Scanner will suggest you position to be taken and Strike Price to be taken, however choosing strike price is individual choice as per money management and risk appetite. The point to note here is PCR and Position, If PCR is low (anything below 0.5 can be considered low), it means lot of call writing has happened, and writers expecting price to come down. In APOLLOHOSP case PCR is 0.44 with highest OI at 1200 which would act as good resistance, where as for CESC, PCR is very very low. Check below OI graph for more understanding.







So, with above analysis in mind we can buy PUT in case of CESC, and since APOLLOHOSP sentiment is neutral and most indicators are suggesting bullish sign except Open Interest/PCR, we can buy PE and cover that with CE with equal spread.

5. If option scanner suggesting CE & Market Sentiment is Buy Buildup to Neutral, you can take Naked CE position when it touches near the support levels/weak below zone and vice versa when Sentiment is Sell and Option scanner suggesting PE.

6. You can build buy/sell option position based on these levels

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