This earnings week has felt like digging through a clearance bin — a whole lot of nothing that really gets you excited…
I’ve looked at dozens of setups, from Interactive Brokers (IBKR) and Progressive (PGR) to Kinder Morgan (KMI) and Alcoa (AA), and most of them are either overpriced, misaligned with expected moves or just flat-out uninspiring.
Premiums aren’t paying enough, and the charts aren’t giving me any conviction either.
That’s not to say there’s no opportunity out there — it’s just limited. In a week like this, when volatility is coming off one of the sharpest crushes in years and valuations are still sky high, I’m not forcing trades. I’m being picky. That’s why only two names really stood out this week: KMI and DHI.
KMI Showed Promise, but the Risk-Reward Wasn’t There
KMI is one of the few setups I was willing to price out in depth. The structure looked solid — decent technicals, not a lot of downside expected, and a potential bull call spread that could have worked if the premiums weren’t so underwhelming.
I wanted to see a little more juice, especially on a two-day trade. Could I have forced something? Sure. But the numbers didn’t justify it. I don’t mind the direction on KMI, and if price pulls back or volatility spikes again, it may come back on the radar.
But the one setup that actually made sense — both technically and statistically — was DHI.
The DHI Trade: Why It Made the Cut
D.R. Horton (DHI) reports earnings Thursday morning, which means any options trade placed today becomes a one-day-to-expiration play post-report. That sounds risky — and it is — but the stats were compelling.
DHI typically moves around 9.5% on earnings. But this week, the market’s only pricing in about 4.6%. That’s a huge discrepancy.
It tells me two things: One, there’s an opportunity to sell premium outside the expected move and still have room. Two, if the stock stays relatively still — which it often does post-report — the IV crush alone can make this trade a winner.
So I built a modified iron condor, leaning a little bullish, around current price action. Keep in mind that the stock was trading around $119.75 when I placed the trade, so take current pricing into consideration and adjust accordingly.
Here’s how my trade looks:
- Sell the 119 call and the 121 put.
- Buy the 128 call and the 112 put.
- Collect a $5.96 credit.
This structure gives me a break-even range between roughly $115 and $124 — wide enough to capture most post-earnings scenarios. My risk is capped, my reward is favorable, and the probabilities line up.
I’m risking less than $300 to potentially make over $400 in one day. If price stays rangebound, this trade gets the full profit. Even if we get a minor reaction, I should still be able to close it for a gain.
This is exactly the kind of setup I want during a light earnings week — statistically sound, manageable risk and a quick exit window. It’s a 0DTE by Thursday, meaning I won’t have capital tied up heading into the weekend, and if the numbers are even halfway decent, I like the odds of this finishing in the green.
You don’t need to take every trade — especially not in an environment like this. With volatility fading and premiums shrinking, your job is to sift through the noise and act only when the math backs you up.
This week, most names didn’t pass the test. KMI came close, but DHI was the only one that checked enough boxes to earn my capital.
Stick to quality. Stay patient. Let the market come to you.
I’ll see you in the markets.
Chris Pulver
Chris Pulver Trading
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