OXY Earnings Play: Using Puts to Get Paid While You Wait

Core Viewpoint - Selling put options before a company's earnings announcement can be a valid strategy for options traders seeking to capitalize on higher than normal volatility [1] Group 1: Strategy Overview - Traders may consider selling a put option for Occidental Petroleum (OXY) due to elevated implied volatility before the earnings announcement [2] - A cash-secured put involves writing an at-the-money or out-of-the-money put option while setting aside enough cash to buy the stock [3] - Selling put options is an accessible strategy for investors, similar to a covered call, and is easy to understand once the basics are known [4] Group 2: Potential Benefits - Selling put options allows traders to collect premium income upfront, and if the options expire worthless, the seller keeps the entire premium as profit [5] - The premium received can lower the breakeven point for the trade, allowing for profit even if the stock price drops but remains above the breakeven point [5] - Traders who are bullish or neutral on OXY can benefit from increased volatility leading up to the earnings report [5] Group 3: Market Dynamics - After the earnings announcement, implied volatility tends to drop significantly, which reduces option premiums [6] - By selling options before the announcement, traders can take advantage of the anticipated drop in implied volatility [6]