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Earnings Trader
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Cabot Options Institute – Earnings Trader Issue: March 27, 2023

Weekly Earnings Commentary

Earnings season is officially behind us. However, that doesn’t mean that we won’t have an opportunity or two to rear its head on a weekly basis.

This week Micron (MU) and Lululemon (LULU) present potential opportunities. The options are highly liquid in both underlying stocks and the IV rank for both sits above 40. Moreover, we have the ability to create a nice, wide range around the expected moves.

*As a reminder, there will be no more Friday webinars until around mid-April when earnings season ramps back up. Until then, expect to see a few potential trades on a week-to-week basis in the weekly issues, some of which I plan to act on.

If you have any questions, please do not hesitate to email me at

Weekly Watchlist

  • Walgreens Boots Alliance (WBA)
  • Micron (MU)
  • Lululemon (LULU)

Top Earnings Options Plays

Here are a few top earnings options plays for this week (3/27-3/31) if you are so inclined:


Courtesy of Slope of Hope

Trade Ideas for Next Week

As a reminder, you will quickly begin to notice I tend to stick with stocks that have high liquidity as it’s far easier to get in and out of a trade. Medium liquidity offers tradable options, but sometimes the bid-ask spread is wider, which means a greater potential for more price adjustments, making entering and exiting a trade difficult from time to time. Remember, there are roughly 3,200 tradable stocks with options and 11% have medium liquidity while only 3% have what’s considered high liquidity.

Potential Trade Ideas for This Week

Micron (MU)

Micron is due to announce earnings Tuesday after the closing bell. The stock is currently trading for 61.16.

  • IV Rank: 48.4

Expected Move for the March 31, 2023, Expiration Cycle: 57 to 66

Knowing the expected range, I want to place the short call strike and short put strike of my iron condor outside of the expected range, in this case outside of 57 to 66.

  • If we look at the call side of MU for the March 31, 2023, expiration, we can see that selling the 67 call strike offers an 85.84% probability of success. The 67 call strike sits just above the expected move, or 66.

Now let us move to the put side. Same process as the call side. But now we want to find a suitable strike below the low side of our expected move, or 57. The 55 put, with an 85.36% probability of success, works.


We can create a trade with a nice probability of success if MU stays within the 12-point range, or between the 67 call strike and the 55 put strike. Our probability of success on the trade is 85.84% on the upside and 85.36% on the downside.

Moreover, we have a 9.5% cushion to the upside and a 10.1% margin of error to the downside.

If we look at the earnings reactions since 4/4/2007, we can see that there have been several breaches of 10% to the upside or downside after an earnings announcement.


As a result, an iron condor looks like a 50/50 chance in MU this week. If one wanted to make a trade, below are the potential strikes that make the most sense or are at least a starting point for a trade.

Here is the potential trade (as always, if I decide to place a trade in MU, I will send a trade alert with updated data):


Sell to open MU March 31, 2023, 67 calls

Buy to open MU March 31, 2023, 72 calls

Sell to open MU March 31, 2023, 55 puts

Buy to open MU March 31, 2023, 50 puts for roughly $0.64 or $64 per iron condor.

Our margin requirement would be roughly $436 per iron condor. Again, the goal of selling the MU iron condor is to have the underlying stock stay below the 67 call strike and above the 55 put strike immediately after MU earnings are announced.

Here are the parameters for this trade:

  • The probability of success – 85.84% (call side) and 85.36% (put side)
  • The maximum return on the trade is the credit of $0.64, or $64 per iron condor
  • Max return: 14.5% (based on $436 margin per iron condor)
  • Break-even level: 67.64 – 54.36.

As always, if you have any questions, please do not hesitate to email me at

The next Cabot Options Institute – Earnings Trader issue will be published on

April 3, 2023.

Andy Crowder is a professional options trader, researcher and Chief Analyst of Cabot Options Institute. Formerly with Oppenheimer & Co. in New York, Andy has leveraged his investment experience to develop his statistically based options trading strategy which applies probability theory to option valuations in order to execute risk-controlled trades. This proprietary strategy has been refined through two decades of research and real-world experience and has been featured in the Wall Street Journal, Seeking Alpha, and numerous other financial publications. Andy has helped thousands of option traders learn and implement his meticulous rules-driven options trading strategies through highly attended conferences, one-on-one coaching, webinars, and his work as a financial columnist. He currently resides in Bolton Valley, Vermont and when he’s not trading, teaching and writing about options, he enjoys spending time with his wife and two daughters, backcountry skiing, biking, running and enjoying all things outdoors.