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Earnings Trader
Collect the Biggest Option Payouts Every Quarter

January 26, 2023

Cabot Options Institute Earnings Trader – Alert (MA)

I will be exiting the Mastercard (MA) trade today. I will discuss the trade in greater detail in our subscriber-exclusive webinar at noon ET tomorrow, January 27. Register here.

Here is the trade:


Buy to close MA February 3, 2023, 405 calls
Sell to close MA February 3, 2023, 410 calls
Buy to close MA February 3, 2023, 350 puts
Sell to close MA February 3, 2023, 345 puts for roughly $0.40 per iron condor (prices will fluctuate)

*If you are having issues exiting the trade, you can always exit the tested side of the iron condor first, followed by the untested side. Also, if you choose to hold the trade to seek a greater profit, please be aware of the risks.

Cabot Options Institute Earnings Trader – Alert (V)

As discussed in our weekly issue and on our weekly call, I will be taking a position in Visa (V) today.

Visa is due to announce after the closing bell today, Thursday, January 26, 2023.

Iron Condor Earnings Trade in Visa (V)

V is currently trading for 224.12. Let’s examine an iron condor trade with a high probability of success.


First, let’s take a look at the expected move in V for the expiration cycle that I’m interested in. Since V is due to report late in the week, I want to go out at least one additional week, in this case to the February 3, 2023, expiration cycle.

The expected move or expected range over the next 8 days can be seen in the pale, orange-colored bar below. The expected move is from roughly 215 to 232.5, for a range of 17.5.


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 215 to 232.5.

This is my preference most of the time when using iron condors.

If we look at the call side of V for the February 3, 2023, expiration, we can see that the 237.5 call strike offers an 88.15% probability of success. So, I’m going to sell the short call at the 237.5 call strike and define my risk with the 242.5 call strike. By choosing the 242.5 call strike to define my risk, I know that there is less than a 6% chance that I will take a max loss on the trade.


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 215. The 210 put strike, with an 87.68% probability of success, works. I’m going to define my risk by choosing the 205 put strike with a 93.23% probability of success. This means we have less than a 7% chance of taking a max loss on the downside.


We can create a trade with a nice probability of success if V stays between our 27.5-point range, or between the 237.5 call strike and the 210 put strike. Our probability of success on the trade is 88.15% on the upside and 87.68% on the downside.

I like those odds. The question is, will the premium be enough to make the trade worth the risk? Let’s take a look.

Here is the trade:


Sell to open V February 3, 2023, 237.5 calls
Buy to open V February 3, 2023, 242.5 calls
Sell to open V February 3, 2023, 210 puts
Buy to open V February 3, 2023, 205 puts for roughly $0.72 or $72 per iron condor (prices will fluctuate, please adjust accordingly if you wish to enter trade)

Our potential return on the trade: 16.8%

Our margin requirement is $428 per iron condor.

Again, the goal of selling the V iron condor is to have the underlying stock stay below the 237.5 call strike and above the 210 put strike immediately after V earnings are announced.

Here are the parameters for this trade:

  • The Probability of Success – 88.15% (call side) and 87.68% (put side)
  • The maximum return on the trade is the credit of $0.72, or $72 per iron condor
  • Breakeven level: 238.22 – 209.28
  • The maximum loss on the trade is $428 per iron condor. Remember, we always adjust if necessary, and always stick to our stop-loss guidelines.

The premium and probabilities look good to me and warrant a trade.

*Also, proper position size is the KEY to long-term success when trading earnings. Keep your size within reason and allow the law of large numbers to do the work. Losses will occur, so manage your position via position size accordingly.