Options Trading Using Whisper Numbers



John Scherr, CEO of
WhisperNumber.com,
discusses earnings trades
with Optionshouse
While the majority of data found on WhisperNumber.com is free with registration, we also provide an enhanced premium subscription service called Whisper Reactors.

A Whisper Reactor is a company that is most likely to see a positive price reaction when they report earnings that beat the whisper number, and a negative price reaction when they miss the whisper number. For stock traders the choice is simple: buy the stock when they beat the whisper, short the stock when they miss.

But using options to capture the potential volatility of a Whisper Reactor is a highly favorable risk/reward approach. Limited risk (for option buyers) and relatively higher leverage (versus buying or shorting stock alone) make options a solid choice for playing the uncertainty and volatility of an earnings event.

So how can an options trader profit from the Whisper Reactors service? Our friends over at the Optionshosue the data, and provided us with a two part educational series. These are the essential options trading strategies most likely to be used along with our Whisper Reactors data:
  • PART I: Option Opportunities with Earnings Volatility
    (An Educational Report Prepared by Optionshouse)


    "If you follow WhisperNumber.com's approach to earnings expectations, then you might appreciate how investors and traders can use equity options to benefit from an earnings event surprise, and the subsequent stock reaction. Why options for earnings events? Because options offer investors and traders higher leverage with lower risk, and this means a much more efficient use of capital for tactical earnings plays with 'Whisper Reactor' companies. In this report, we'll look at some of the basic option strategies that can profit in various earnings volatility scenarios."

  • PART II: The Straddle: More Options for Earnings Volatility
    (An Educational Report Prepared by Optionshouse)


    "In our report on "Option Opportunities with Earnings Volatility," we introduced the power and versatility of buying calls or puts to capitalize on Whisper Reactor earnings events. In situations where an investor is uncertain about an earnings beat or miss (in the weeks prior to the earnings release), another way to play the event is to look at both a call and a put for the underlying stock in question. The option straddle is a strategy involving the purchase of both a call and a put on the same stock."
Traders and those considering WhisperNumber's Whisper Reactors Service may also be interested in the following strategies for pre and post earnings option trading:

  • The Long Strangle (a pre earnings release strategy)
    (from the Options Industry Council)


    "An instance of when a strangle may be considered is when an earnings announcement is forthcoming. The investor feels the projected announcement will introduce large price swings in the underlying. If the earnings announcement and future outlook is positive, this may positively impact the price of the security. If the earning announcement and outlook is negative, or fails to impress investors, the stock could decline considerably."

    The Whisper Reactors service provides options traders with companies most likely to see price volatility (regardless of actual earnings) up to four weeks prior to the actual earnings announcement.


  • The Long Straddle (a pre earnings release strategy)
    (from the Options Industry Council)


    "Purchasing only long calls or only long puts is primarily a directional strategy. The long straddle however, consisting of both long calls and long puts is not a directional strategy, rather it is one where the investor feels large price swings are forthcoming but is unsure of the direction. This strategy may prove beneficial when the investor feels large price movement, either up or down, is eminent but is uncertain of the direction."

    The Whisper Reactors service provides options traders with companies most likely to see price volatility up to four weeks prior to the actual earnings announcement.


  • The Bull Call Spread (a post earnings release strategy)
    (from the Options Industry Council)

    "An investor often employs the bull call spread in moderately bullish market environments, and wants to capitalize on a modest advance in price of the underlying stock. If the investor's opinion is very bullish on a stock it will generally prove more profitable to make a simple call purchase."

    The Whisper Reactors service provides options traders with companies most likely to see bullish price movement when they exceed the whisper number.


  • The Bear Put Spread (a post earnings release strategy)
    (from the Options Industry Council)

    "An investor often employs the bear put spread in moderately bearish market environments, and wants to capitalize on a modest decrease in price of the underlying stock. If the investor's opinion is very bearish on a stock it will generally prove more profitable to make a simple put purchase."

    The Whisper Reactors service provides options traders with companies most likely to see bearish price movement when they fall short of the whisper number.




No statement in this web site is to be construed as a recommendation to purchase or sell a security, or to provide investment advice. Options involve risk and are not suitable for all investors. While the above information and trading strategies are presented for your review, WhisperNumber.com, affiliates, and sponsors make no warranties, implied or assumed, for any information on this site, and is not responsible for any financial loss which may result from the use of information. We strongly suggest you contact your broker to discuss these strategies to determine if they suit your trading activities.


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