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Sunnyside Up

Market Measures

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One of our favorite ways to increase our number of occurrences is to place trades around earnings. These binary events provide us with an opportunity to sell volatility when it is high. We are essentially playing for a 1-day volatility contraction if we have a neutral position. Today, Tom Sosnoff and Tony Battista take a look at a different earnings play known as a Sunnyside Up. A Sunnyside Up is formed by buying a call spread and financing it with an 84% OTM Call so that the entire trade is placed for a credit. This removes the risk to the downside. Even though this is a bullish position, we don't want the underlying to rally above our naked call strike. The guys find out that this is a great way to play earnings and look to add it to their earnings playbook!

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