From Theory To Practice - January 26, 2021 - Reducing Max Loss on Earnings Trades

published 4 weeks ago by tastytrade, Inc.

Earnings announcements routinely offer us consistent opportunities to trade high IV scenarios and stay engaged in the market. But given the explosive nature of the potential moves from these announcements, it’s imperative that we stay small with our trades and appropriately size our positions. As a result, there will be many times when we want to reduce the maximum loss on one of our earnings trades. Today, we see exactly how to do that with a defined-risk trade for SBUX earnings.

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