Ready to Filter Your Trades by Earnings and Ex-Dividends Dates? Now You Can

Ready to Filter Your Trades by Earnings and Ex-Dividends Dates? Now You Can

Last week, we made note of a new Option Party feature: the ability to scan exclusively for or completely excluding ETFs. This gives investors a convenient way to use their favorite strategies or develop a new one using Exchange Traded Funds rather than individual stocks. While investors can search for both ETFs and individual stocks in the same screen, having the ability to single them out or completely discard is undoubtedly a time saver for some.

But Option Party has a few other time-saving and trade-enhancing features coming your way, starting with earnings.

Not long ago, we talked about how investors could use a back-of-the-envelope calculation to figure out the estimated post-earnings move of a stock. This method can be used for any planned event, such as an FDA announcement or investor day presentation. Building off of earnings, Option Party now let’s investors scan based on a company’s earnings date.

Obviously if we’re scanning exclusively for ETFs, this feature doesn’t carry much weight. But if we’re looking for only individual stocks or scanning for stocks alongside ETFs, this method carries massive weight.

Scanning by the Earnings Announcement Date

Why does this help investors? Consider how many times you’ve found the perfect setup, only to realize that the company reports earnings within your expected trading range. Or remember how many times (at least for beginning traders) they had a perfect trade put on, only to see big gains turn to big losses thanks to the stock’s earnings reaction.

On the flip side, there are traders that are able to successfully navigate stocks because of upcoming earnings reports. Admittedly, this is generally a smaller crowd than those who look to avoid earnings. This is because earnings tend to introduce a powerful wave of volatility to a stock’s price. Even good earnings results can be overlooked based on supply/demand factors, future guidance or same-store sales results. Margin pressures, increased competition and poor inventory management can also wreak havoc on what was otherwise a good quarter.

The point is, volatility can come from just about any direction when a company reports earnings. Being able to predict those reactions can be incredibly difficult, even for a seasoned trader. While we can master a few companies and their businesses, always knowing the reaction is impossible. Some traders may use volatility or range-based strategies rather than directional trades, though. For them, capturing earnings may be a key component to their strategy. 

To begin the screening process involving earnings, traders will head over to the “Positions” page. Once they have selected a screening strategy to edit, simply go to the “Options Expiration” tab on the right and find the “Earnings Announcement” drop-down menu. From there, investors can toggle between “No Preference,” “Before Expiration” and “After Expiration.”

By selecting “No Preference,” the Option Party system will simply ignore its earnings data and return all results that fall within the rest of the trader’s criteria. “Before Expiration” will only show stocks that report earnings before the expiration of the trade. “After Expiration” then obviously selects stocks that will report after the option’s expiration, thus removing the stock’s post-earnings volatility from the trade.

Traders can adjust when their options trade expires as well. In the same “Options Expiration” tab, just above the “Earnings Announcement” drop-down is the “Max Expiration Type.”

Investors can either choose by calendar date or the maximum number of weeks until expiration. For example, a trader can say they want to filter trades by options that expire in less than four weeks. When coupled with an Earnings Announcement filter of “After Expiration,” this will only return results from companies that do not have an earnings report scheduled between now and the next four weeks.

Those looking to include earnings can make a similar move, too. They can also select a calendar date as their expiration of the trade. By selecting a calendar date, say August 18th for example, all stocks that are scheduled to report earnings between now and August 18th will be included in the search so long as they meet the rest of the trader’s search criteria.

Don’t Forget About Dividends

Another new feature from Option Party can be found in the same “Options Expiration” drop-down menu. Traders can now filter out stocks by their ex-dividend date. An ex-dividend date is used to determine the last day in which investors can buy a stock and still collect the company’s dividend payout. Put simply, investors have to buy the stock before the ex-dividend date in order to receive the payment.

As an example, shares of ABC go ex-dividend on August 3rd, payable on September 3rd. Investors who want to collect the dividend will need to own the stock on the close of business on August 2nd, which is known as the record date. The ex-dividend date is the first day in which a stock trades where investors do not collect the dividend.

Since we are trading options, why do dividends matter to us? First, when a stock goes ex-dividend, it can impact the stock’s price. On paper, the stock would typically drop by the size of the dividend payment. However, due to market efficiency, this doesn’t always happen, particularly in the options market. Additionally, some traders want to capture the dividend (think covered call strategies) as part of their trade.

In the first situation — added volatility — traders may try to sidestep the ex-dividend date. In this case, traders will want to go to the “Options Expiration” tab and down to the “Ex-Dividend Date” drop-down menu. For those that don’t want the ex-dividend date in the way, they will select “After Expiration.”

For those who want to trade stocks within the ex-dividend date — such as in the second case above where the trader may be attempting a dividend capture strategy — they will want to select “Before Expiration” from the drop-down menu.

Adding these additional features to go alongside the ETF screening and other factors allow traders to make more personalized trading strategies that better fit their needs. No more finding the perfect strategy and realizing it’s ruined by earnings or won’t work because it misses the dividend.

Read About Some of Our Other New Features

Using IV Rank to Choose Better Trades

How to Pick Your Options Strategy

Welcoming a New Feature: Scanning for and Excluding ETFs