A Guide to Trading Options Around Earnings
A Guide to Trading Options Around Earnings
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This material is intended for general informational and educational purposes only. This should not be considered an individualized recommendation or personalized investment advice. The securities, investment products, and investment strategies mentioned are not suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decisions.
Investing involves risk, including loss of principal, and for some products and strategies, loss of more than your initial investment.
Past performance is no guarantee of future results.
Equity options carry a high level of risk and are not suitable for all investors. Certain requirements must be met to trade options through Schwab. Please read the Options Disclosure Document titled "Characteristics and Risks of Standardized Options" before considering any option transaction. Call Schwab at 1-800-435-4000 for a current copy. Supporting documentation for any claims or statistical information is available upon request.
Spread trading must be done in a margin account. Multiple leg options strategies will involve multiple transaction costs. Uncovered options strategies are only appropriate for traders with the highest risk tolerance, may involve potential for unlimited risk, and are only allowed in margin accounts.
Schwab does not recommend the use of technical analysis as a sole means of investment research.
The paperMoney® software application is provided for educational purposes only, and allows users to engage in simulated trading with hypothetical funds using live market data. Market activity, trade executions, transaction costs, and other elements presented in paperMoney are simulations only. Simulated performance does not ensure success in a live environment.
IMPORTANT: The paperMoney virtual trading application will not assign a short option position early, which is different from a real trading account.
Commissions, taxes and transaction costs are not included in this discussion, but can affect final outcome and should be considered. Please contact a tax advisor for the tax implications involved in these strategies.