Oracle $ORCL earnings tonight after the bell? Who's jumping into the Vol Crush pond with me?!

https://preview.redd.it/820j53jkgh6h1.png?width=1345&format=png&auto=webp&s=561273de2e2cba8cd95e1cec26fef0c023330d2c

EA trades are my favorite set-up. This time of year, there are few and far between EA to play, but today I'm anxiously awaiting $ORCL earnings.

My assessment: IV is cheap, so I'm play it from the long side.

1. While the implied move unadjusted for Vol Crush is nearly 13%, my estimate for Vol Crush is about 8.5 points. Therefore, Vol Crush adjusted IV, factoring historical standard deviation of returns with a 68% CI, is cheap at roughly 10%.

2. The above graph plots historical $ORCL earnings moves, both for the opening gap and close-to-close versus expected moves. As you can see, about 91% of the time, the market underestimates the actual move.

3. I can put on a defined risk trade with a very attractive reward to risk ratio, resulting in a high EV outcome.

Trade will be opened going into today's close. Then see what happens after the EA and conference call, wait until around 9:45 a.m. tomorrow after price discovery occurs, and exit the trade, win or lose.

I expect lots of folks to take the opposite side of this trade, which is fine by me. The more sellers that I can buy from, the better!

Happy trading!