Woa! It's Been Awhile!

Over the past month I've been busy with "life" stuff and have neglected to post on the blog about my recent trades. I went dormant from March 16 onwards. I had a profitable GDX iron condor and 3 earnings trades two weeks ago, of which two were profitable and one was a scratch.

The account is now up 1.12% which is great since at one time it was down 2.24%. That's not great but it's also not terrible. I had to climb out of that hole while simultaneously dealing with declining volatility across markets, giving me fewer opportunities to make up ground.

Now that it is earnings season, there are some opportunities to sell high IV. Although I prefer not to trade events/earnings, you have to go where the vol is when you're and options trader. So today I took off a profitable trade in HOG after they reported earnings this morning and also just put on an earnings position in TXT. [Stocktwits stream]

The idea behind earnings trades is to capture the collapse in IV that occurs right after earnings are announced. To best capture this phenomena, sell premium on both sides to be delta neutral. Then, when IV collapses, take the position off the next morning. It's usually a fairly easy way to make quick money, however, sometimes stocks can move wildly and outside their expected ranges if they miss or beat earnings estimates significantly. Additionally, in order to best capture the IV collapse, the shortest available DTE contracts should be traded. This means that position sizing should be a fraction of what it is on a normal position, because stocks can move larger than expected and there is little time to adjust a losing position, if it can be adjusted properly whatsoever.

With the VIX trading around 13.5, it looks as though earnings trades are going to be what I'm doing for the remainder of the season. I don't think volatility across the market will pick up until June, maybe, if the Fed decides to hike rates. Or there is more bad news out of China ... you never know. But through most of 2015 the VIX remained low ...  that is until it spiked to FIFTY in late August, a level not seen since 2011/2008. When vol comes back into the market it is more than likely to do so in a big way.