One of the normal realities in trading is the fact that not every trade can “work”. All a trader can do is execute a trade based on their Trading Process and manage the outcome. For traders that venture into Earnings trades, this is especially true since a post-Earnings reaction can often be out-sized and/or wild.
The overall success in your Trading will come down to how well you design trades – design trades to accommodate as many scenarios for price as possible while still being in a position to participate in a price move.
I have a trade on in $JWN and it will not make any additional money for me. Here are the specifics:
- Long the August 70/72.5 1×2 Call Ratio
- Short the August 62.5 Puts
- This was done for a $.10 debit
- This trade takes margin (at least until the uncovered short pieces are closed)
This is a current Daily chart:
An Inverted Hammer has formed (a trend reversal signal, needs confirmation on Monday). Here is what happened to the Options:
If a trade is not going to work in your favor (provide more profits, move in the desired direction) then this is the ideal outcome. Poof at expiration.