Earnings Week Preview: Navigating Bank Earnings with Iron Condors

Bank earnings kick off this week with heavyweights like JPMorgan Chase and Bank of America leading the charge. The significance of this week extends beyond mere numbers; it reflects the broader economic landscape and sets the tone for market sentiment moving forward. Over the last two years, JPM has beaten estimates in 7 out of 8 earnings reports, boasting an average move of 2.8% on earnings day. This volatility can be both a blessing and a curse for traders, especially those holding directional positions.

Historical Context: How These Stocks Move

Looking back at past earnings, we see notable patterns in how these stocks behave. For instance, JPMorgan has consistently stayed within its expected move in 7 of its last 8 earnings announcements. This historical data is crucial for options traders, providing a foundation for strategies that capitalize on predictable price ranges rather than unpredictable directional moves.

As we gear up for this earnings week, it's important to remember that Maya typically avoids holding directional spreads through earnings due to the inherent risk of implied volatility (IV) crush. Post-announcement, IV can drop between 30-50%, which can devastate long premium positions. Thus, the strategy of selling spreads directly before announcements can be a perilous endeavor.

Iron Condors: A Safer Earnings Play

This is where the iron condor strategy shines. By selling both a call spread and a put spread, traders can collect premium from both sides while limiting risk. The rationale is simple: high IV before the announcement results in more premium collected. Once earnings are released, the IV crush occurs regardless of the stock's direction, which can benefit the trader as long as the underlying stays within the short strikes.

Harnessing the Power of Maya's Earnings Iron Condor Scanner

To effectively implement iron condors during earnings, traders need precise data and timing. That's where Maya's Earnings Iron Condor Scanner comes into play. This invaluable tool automatically identifies optimal setups by calculating specific call and put spread strikes based on the expected move.

The scanner provides essential metrics like net credit, max loss, and probability of profit. Most importantly, it displays historical earnings moves, revealing whether each stock typically stays within its expected range. For instance, knowing that JPM has remained within its expected move in 7 of the last 8 earnings gives traders the confidence to deploy iron condors effectively.

This Week's Earnings Lineup

Here’s a quick look at the key earnings reports scheduled this week:

• Tuesday, Jan 13: BK, JPM (both after-hours)
• Wednesday, Jan 14: BAC, C (both after-hours)
• Thursday, Jan 15: BLK, GS, MS, WFC (all after-hours)
• Friday, Jan 16: PNC, UNH (both after-hours)

For real-time strike selections and historical data, head over to /TradeScanner and harness the power of Maya's Earnings Iron Condor Scanner. This week presents a unique opportunity for traders looking to navigate the volatility of earnings announcements safely and profitably.