Preface
With the market's direction becoming tenuous, we can explore option trading opportunities in Apple Inc (NASDAQ:AAPL) that do not rely on stock direction. It turns out, over the long-run, for stocks with certain tendencies like Apple Inc, there is a clever way to trade market anxiety or market optimism before earnings announcements with options.

This approach has returned 105.1% with a total holding period of just 60 days, or an annualized rate of 639.4%. Now that's worth looking into.



The Trade Before Earnings
What a trader wants to do is to see the results of buying an at the money straddle a few days before earnings, and then sell that straddle just before earnings. The goal is to benefit from a unique and very short time frame when the stock might move 'a lot', either due to earnings anxiety (stock drops before earnings) or earnings optimism (stock rises before earnings), but taking no actual earnings risk. Here is the setup:



We are testing opening the position 7 calendar days before earnings and then closing the position 1 day before earnings. This is not making any earnings bet. This is not making any stock direction bet.

Once we apply that simple rule to our back-test, we run it on an at-the-money straddle:

Returns
If we did this long at-the-money (also called '50-delta') straddle in Apple Inc (NASDAQ:AAPL) over the last three-years but only held it before earnings we get these results:

AAPL
Long At-the-Money Straddle

% Wins: 75.00%
Wins: 9 Losses: 3
% Return:  105.1% 
% Annualized:  639.4% 

Tap Here to See the Back-test

The mechanics of the TradeMachine™ are that it uses end of day prices for every back-test entry and exit (every trigger).

We see a 105.1% return, testing this over the last 12 earnings dates in Apple Inc. That's a total of just 60 days (5 days for each earnings date, over 12 earnings dates). That's an annualized rate of 639.4%.

We can also see that this strategy hasn't been a winner all the time, rather it has won 9 times and lost 3 times, for a 75% win-rate and again, that 105.1% return in less than two-full months of trading.

Here is a 1-minute and 25-second video that shows you exactly how to do this for any stock and what every professional option trader would rather that you don't see.

Learn more here: Try the Back-tester Yourself

Setting Expectations
While this strategy has an overall return of 105.1%, the trade details keep us in bounds with expectations:
      The average percent return per trade was 9.15%.


Option Trading in the Last Year
We can also look at the last year of earnings releases and examine the results:

AAPL
Long At-the-Money Straddle

% Wins: 100.00%
Wins: 4 Losses: 0
% Return:  67.1% 
% Annualized:  1,224.6% 

In the latest year this pre-earnings option trade has 4 wins and lost 0 times and returned 67.1%.
      Over just the last year, the average percent return per trade was 15.32%.



WHAT HAPPENED
This is it -- this is how people profit from the option market -- finding trading opportunities that avoid earnings risk and work equally well during a bull or bear market.