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I’m always hunting for that asymmetric edge — and I’ve got one that’s shaping up beautifully on Nike (NKE) heading into tomorrow’s earnings. We’re in a market environment loaded with premium, and that combination of elevated volatility and earnings season timing is exactly when these setups become most attractive.
Here’s the setup that caught my eye: The at-the-money straddle is pricing in about a 9% implied move. That’s the expected swing — the market thinks we’ll see roughly that much movement after earnings.
But drop down to the $40 strike and suddenly you’re playing a very different game. Nike would have to sell off about 20% before that level even comes into play. When the market is pricing 9% but your position doesn’t start sweating until more than double that, you’re not guessing — you’re engineering protection.
And this is where the trade comes in. The structure I like is a deep out-of-the-money bull put spread — selling the $45 put and buying the $40 put.
You’re taking advantage of elevated premium while positioning far below the expected move, which is exactly the kind of setup I want during earnings volatility.
The Asymmetric Advantage
This setup is like being dealt pocket kings. You’re not trying to predict direction or outsmart the market — you’re using probability to put the odds firmly in your favor.
One thing I always stress is that you don’t need to dive into heavy math to understand why this works — nobody is getting tested on statistics here.
A quick way to think about it: standard deviations, or sigma levels, help show how far a stock is expected to move based on volatility. At around 3 sigma, the probability of price staying within that range is roughly 99.7%. So when you structure trades far outside the expected move, you’re tapping into those high-probability pockets most traders never bother to explore.
That’s why this strategy shines. You’re stacking probabilities instead of relying on hope, and you’re letting volatility do the heavy lifting.
Why This Matters Now
We’re in a stretch where elevated volatility and earnings events are overlapping, and that combination creates unusually rich premium. When premium swells, so does the opportunity for traders who know how to position outside the noise.
Most market participants see an implied move and assume that’s the battlefield. But the smart play is using that expected move as a marker, then positioning well beyond it.
This Nike setup works because the risk parameters are clear, the probabilities are leaning heavily your way, and the cushion you’re building gives you room to breathe even if earnings come in hot. You’re not fighting the market — you’re letting the structure of the trade handle the risk for you.
That’s how you stop trading scared and start trading smart.
Order Flow:
This is for informational and educational purposes only. These are not official alerts issued by Lance, but rather some interesting orders picked by the team at Lance Ippolito Trading.
When you look at these plays, always take the market maker move into consideration.
You can be right on the direction but still lose money if the stock doesn’t move enough. That’s where the market maker move comes in clutch.
With puts, they’re often downside hedges in case a stock tanks, especially around earnings. The further out of the money they are, the more likely they are to be hedges.
Also be sure and check when the company’s earnings date is because many of the plays we post here are centered around earnings!
If a stock is really expensive, consider a spread to lower the cost.
And finally, always remember the golden rule when it comes to buying calls: Buy dips, sell rips — and don’t chase!
If a stock’s moved a ton already today, maybe wait for a pullback.
There is inherent risk in trading. Trade at your own risk.
Note: If no date is listed after the month, it’s the monthly expiration (third Friday).
The team at Lance Ippolito Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. We’ve Clocked 200 Winners Trading the Market’s Most Repeated Daily Pattern
By playing a pattern the market repeats daily no matter what…
We’ve been able to stay immune from some of the worst markets in the last year.
Be it the war with Iran this year or the tariff war last year, my No. 1 daily approach has kept us floating and in the green.
Want to see how it works?
We develop tools and strategies to the best of our ability, but no one can guarantee the future. There is always a risk of loss when trading past performance is not indicative of future results. From 2/20/25 to 3/30/2026, the average win rate on live published trade alerts is 89.7%. The average weighted rate of return on options trades was 14.11% over a six-hour hold time.
