Running Hot Pre-Earnings Diagonal

This is a discussion of the "Running Hot Pre-Earnings Diagonal" strategy.

This is a bullish pre-earnings speculation that waits for a stock already “running hot” with 14-day RSI above 70, then buys a 14-day 50-delta call and sells a 7-day 30-delta call, aiming to capture continued upside before exiting no later than one day before earnings.

Overview

• Call Diagonal
• 2 legs

Running Hot Pre-Earnings Diagonal Strategy Settings

• Running Hot Pre-Earnings Diagonal utilizes a custom strategy which is labeled "Diagonal 14_7 50_30" under the custom strategy dropdown menu.

Running Hot Pre-Earnings Diagonal Open Conditions:

• 14 Day RSI above 70
• On a scale of 1 to 5 (best) the minimum liquidity for an option trade is 4
• 14 days before earnings announcement

Details on Options TradeMachine is Selecting for Running Hot Pre-Earnings Diagonal Strategy:

• 1x long 50 delta call near 14 days to expiration
• 1x short 30 delta call near 7 days to expiration

Earnings Handling for Running Hot Pre-Earnings Diagonal Strategy:

• Custom Earnings
  • Open 14 days before earnings
  • Close 1 day before earnings

Running Hot Pre-Earnings Diagonal Close Conditions:

• 14 Day RSI above 75
• Close 1 days before earnings
• Gains are above 50%
• Options reach expiration (Close all legs with front month options)

Open next trade for Running Hot Pre-Earnings Diagonal:

• At Normal Time