The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be answering the question – “Why did my call options decline on positive earnings?” This is a very common thing to happen for new traders who are playing a potential big move after an earnings event. And so, many times, people will buy call options heading into an earnings event, expecting a very big move in the underlying stock and in many cases, they might actually get the very big move in the underlying stock. Maybe the stock gaps up 5% or gaps up 3% or has a big rally during the day because of a positive earnings announcement. But the problem that they see is they see that their actual call option that they purchased declined in value. And so, the question now is – “Well, why did that happen?” When you pick the direction right and you have a call option kind of ready to go, waiting for a big move in the underlying security and you get that big move, why do you then potentially lose money becau