This column is updated every Monday, featuring options volatility data for key earnings stocks in the upcoming week.

Option Volatility And Earnings Report For June 2- June 6

On this Friday, June 6, the US will announce the May non-farm payrolls report. According to the futures market data, the probability of the Federal Reserve maintaining the status quo in June currently stands as high as 9%. Due to the unexpectedly strong employment data from the previous month, Wall Street anticipates the timing of rate cuts to be postponed from June to July.

In terms of earnings, there are relatively fewer reports this week, but Broadcom Limited(AVGO.US) , CrowdStrike(CRWD.US) , CREDO TECHNOLOGY GROUP HOLDING LTD(CRDO.US) , and Lululemon Athletica Inc(LULU.US)  remain key stocks that investors are focusing on.

Earnings reports often lead to heightened implied volatility in options due to market uncertainty, driving up demand and prices for options. However, implied volatility typically drops back to normal levels after the earnings announcement.

To estimate a stock's expected price range around earnings, traders can use the option chain by adding the prices of the at-the-money put and call options for the first expiry date after the earnings report. While this method provides a rough estimate, it is a useful tool for structuring trades.

Data as of 2/06/2025

• Bearish traders can consider selling bear call spreads outside the expected range.
• Bullish traders may opt for selling bull put spreads outside the expected range or explore naked puts for higher risk tolerance.
• Neutral traders can utilize iron condors, ensuring the short strikes remain outside the expected range.

When trading options during earnings, it is crucial to use risk-defined strategies and maintain small position sizes. This ensures that even if a trade suffers a full loss due to an unexpected stock move, the impact on the overall portfolio remains limited to 1-3%.

Details on Options Strategies, Follow Here:

• Call/Put Spread Options Trading Strategy Amid Bull Market
• Call/Put Spread Options Trading Strategy Amid Bear Market
• Five Options Strategies for When the Market Lacks Volatility
• The Three Best Option Strategies for Earnings Season

Disclaimer: This column is solely for information organization and sharing. All materials and data are sourced from publicly available markets and should not be used as a basis for investment decisions.