Cheddar News' Courtney Sturgeon reports from the Cboe floor with Alan Knuckman, Chief Market Strategist at Bulls Eye Option, to discuss strategies for options traders ahead of a busy trading week amid earnings, the FOMC meeting, and more.

Strategies for Options Traders

All right, this next segment is brought to you by CBO, the world's leading Derivatives and Securities Exchange Network. Our reporter Courtney Sturgeon is standing by in Chicago with Alan Chief Market strategist at Bulls Eye option. Take it away. Courtney Chloe. Yes, we have a busy week here at CBO and Allen. You're going to give us the rundown. We've had a very busy earning season. Good, not great. But what else can you tell us where we stand in 2023 especially after a record breaking year in terms of volume last year? Well, 2023 has been great. Almost every asset class has rallied and that's been a positive with the dollar being down. That's kind of the running running theme. So the earning season we over they had very, very low expectations. We will achieve 50% of the companies have reported more than that now and we've got 80% that beat their earnings estimates and 75% beat their revenue estimates, which is really important because we have a revenue increase of about 3%. So even though their earnings are less, the revenues are increasing, that's very positive and can you tell us about certain sectors like the tech sector, we saw a lot of earnings last week. What that meant for options traders. I think that's a psychological issue is to keep track of tech because tech got so badly beaten up and we're 20 something percent off the lows right now. So we still have a lot more upside. But if you look at some of the big name stocks, you've seen some major turn arounds in the Tesla, the meta, the Apple, all the big boys, nobody wanted to buy when they looked bad. But now people get it that these companies are cash cows and produce very, very well. We have Apple coming out. The expectations are very minimal for Apple. I think the option straddles pricing in about a 4% measured move. So not anything big, but you know, we'll know that they're going to make billions and billions in pure profit. Those straddle strategies and others. What can you point to for options traders, especially this week with so many announcements coming out? Well, what all I try and do is use those straddles to gauge how much of a move that the market is pricing in and the market usually has it right. I'm always a price guy. So that gives me an expectation of what the move is. And now it doesn't say whether it's going to be up or down, but it's going to be X percent by looking at that at the money straddle. So a lot of times people don't trade earnings per se because that's more of a gamble. You could be surprised. You don't know how the market is going to react. Even with positive numbers, you know, they can have further guidance that might be negative. Who knows? I'm an options trader for further out. I buy 3 to 6 months options. So I typically don't buy options the week of earnings because, you know, have a binary event. I'll look to buy some options that are three months away or so after an earnings event. Ok. And a big event coming up this afternoon, the fed announcement, any insights or opinions about what we might see with a potential hike there as we talked, I'm not an opinion guy. I'm a price guy. The markets are telling us there's going to a quarter point, but the best part is we're at the end of this rate height cycle, we're actually going to see the markets are telling us we're going to see a rate cut by year end. So this is over. Now. I want to talk about optimism and the fact that we're 15% off the all time forever highs in the S AND P with all of what's happened and how we've raised rates from 0 to 5%. So if you look at the S and P, we're above 4000 for more than a month now. And it looks like we're ready to test the top of this range and it's set up for very positive possible moves here. Well, that's good to hear that positivity from you all and thanks and all of your insights as well. Thanks for being here with us at CBO and I'm going to toss it back to you Chloe Courtney Sturgeon. Thank you so much for that interview. That's our reporter with Ackman Chief Market strategist at Bulls Eye option. Now to learn more about options, trading visit CBO dot com.