Oct 29 • Trade Alerts
GOOGL Earnings: Volatility Term Structure Arbitrage?
Hi, earnings season keeps delivering setups, and tonight's main event is Alphabet (GOOGL). After a 38% run in Q3 and record-high IV into the print, it's the perfect playground for advanced volatility structures.
One of my favorite plays here (definitely not for beginners) is the Calendarized Call Ratio Spread. This trade doesn't play direction, but volatility term structure.
Ahead of earnings, front-month (Nov) options trade at much higher implied volatility than back-month (Dec). We're selling two overpriced short-term calls to finance one longer-term call, building a temporary edge as front-end IV collapses right after earnings.
So, you're essentially selling panic to buy time.
Note: this is a very advanced structure with unlimited risk to the upside. It requires active management!
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GOOGL Earnings: Volatility Term Structure Arbitrage?
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