Unit 2 · Level 3 · Event trading
Review: the event playbook
Read the expected move from the straddle. Decide if it's too big or too small versus your own estimate. Express the disagreement with a defined-risk structure. Size it so a total loss is boring. Around true binaries, size down further or sit out. That's the whole event playbook. Let's test it.
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What you get asked
The fastest honest read of the market's expected earnings move:
The straddle is the market's forecast with money behind it: thirty seconds of arithmetic, no terminal required.
Post-event ___ is why a bought straddle can lose even when the stock genuinely moves.
The event premium evaporates the moment uncertainty resolves. A real move that's smaller than the paid-for move is still a loss.
Reassemble the pro's event workflow
Mispricing first, structure second, size always. Direction never makes the list.
Why do pros cut size hardest on FDA rulings and macro prints?
No path, no stop. When the risk control is size alone, size must be small enough to lose entirely without damage.
The deepest habit separating event pros from event gamblers:
The news is free and everyone has it; the mispricing of the news is scarce and few can see it. You now can. 🐜
The rest of this unit
Expected moves, straddles and binary gaps: trading the calendar like a pro.