As you know I don't trade earnings at all. But post earnings generates some really good opportunities. You will see a chart like this repeating on every post-earnings trade. Post earnings trades are very different than our regular mean reversion trades. These are actually continuation trades. Since, earnings causes a reset in the stocks price movement and its personality, you have to respect the direction in which earnings sends the stock price and have to find trades in the same direction. We will be seeing many of these trades in the coming weeks. With HELE, look at the yellow line I have drawn. Great Earnings + Analyst upgrades gapped up the stock to $209.99 Now, in these situations you will notice there is almost always a pullback after the initial earnings spike. The key to take a trade is to wait for that pullback to happen. You usually get 2 opportunities. We got in today on the first opportunity.

HELE kept falling after putting on this trade and stayed down for most of our trading window. If you had a naked call during this period, you would have been wiped out completely due to time decay. However, debit spreads are resistant to Theta and we were able to close this trade for a full winner!