We often trade the high volatility into earnings plays; however, we also trade them by selling puts or calls as the intra-day pattern sets up within the first 60-minutes following a bullish or bearish gap.

This is why we always track earnings dates of leading, high volume optionable equities.

Below is the weekly chart of CREE:

8-16-2016 CREE weekly 4-18-01 PM

Last month it broke out of consolidation from Major Support around $23.50 with a Bullish Wide Range Bar (+WRB).

Below is the daily chart of CREE reflecting the closing price before earnings were released on 8/16/16:

8-16-2016 CREE daily 4-17-09 PM

After the bell earnings were released and the stock tanked to the low $25s where minor support is at the prior gap area, and stabilized in the mid-$25s.

Because of the gap to support and bullish support area on the daily and weekly charts, this will be an excellent candidate to consider puts today.

Provided a bullish intra-day pattern sets up at the open.

Although the pre-earnings high implied volatility will substantially contract, the large gap will nevertheless keep them elevated for a short-term trade.

I will update this Option Newsletter later and describe my trades, if any.

Happy trading!  If you have any questions or comments, please e-mail Dan Gibby at Dan@gregcapra.com