The ultimate play:STRADDLES on earnings announcements. Message Board

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Strategies & Market Trends : The ultimate play:STRADDLES on earnings announcements.

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To: Jay Baca who wrote (133)	9/1/1997 9:54:00 PM
From: John F. Summa	of 140

Thanks for your reply Jay. I am new here and would like to get some feedback on the idea of using synthetic puts on earnings play as an alternative to using straddles or stangles. I like the idea of shorting the company on the eve of earnings and going long with a call just in the money that is written several months out. This way if earnings miss you can cover your short stock on any gap down, and still have the calls to write a bull spread on for the bounce back over the next month. This seems a better approach and was wondering if anyone has considered it. By shorting you avoid the cost of the puts, thus lowering the break point. Also the calls written way out allow for capturing the stocks climb back from a missed earnings (assuming the earnings are a temporary setback). And if earnings are on target or beat estimates, assuming you are only playing bullish stocks, you'll be well positioned to profit as the underlying climbs. Only needing to cover the short position after earnings come out. A gap up you can cover on the pullback, etc. What do you think?

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