Earnings announcements provide us with an opportunity to place a trade that will take advantage of high implied volatility rank. However with a high IV, larger moves can occur. When this happens, we will have to defend these positions in order to turn a loser into a winner.
Today, Tom Sosnoff and Tony Battista look at a recent earnings trade in Salesforce.com (CRM). After a large up-move after earnings, the guys look to go inverted and extend duration to give themselves more time to be right. Eventually CRM comes back in line and they are able to take a large loser into a winning trade by staying mechanical!