Karim Rahemtulla, Co-Founder, Monument Traders Alliance Dear Reader, Late yesterday, I made a $12 bet on Navitas' earnings. This morning, NVTS opened up 22%, and I collected a $175 profit per 100 shares. But here's the thing - I was just as prepared to lose money as I was to make it. The difference? My $12 insurance policy meant I'd lose $100 instead of $300 if everything went sideways. Most traders either win big or get their faces ripped off during earnings. I found a way to win big or lose small. What Actually Happened Behind the Scenes Tuesday afternoon, NVTS was trading around $8. Earnings were after the bell. I owned shares, but I was aware that the reaction would be volatile. This thing could gap up... or crater at the open. The implied move was in the double-digits, meaning big swings either direction. So I bought insurance: $7 puts for $0.12 each. That's $12 out of my pocket (since one options contract represent 100 shares). If NVTS dropped to $5, I'd lose $3 per share. But my puts would gain $2. That means I'd lose just $100 per 100 shares. If NVTS rocketed higher - which is what happened - I'd lose my $12 insurance premium... while my shares soared. This morning: NVTS at $10. Puts expired worthless. I was up $200 per 100 shares. Cost of insurance: $12. Net profit: $188 per 100 shares. The Real Math of Not Getting Destroyed Now, I'm not pretending that married puts eliminates losses. They don't. Had NVTS tanked, I still would have lost money. The beauty is HOW MUCH I'd have lost. That $200 difference? That's the difference between "ouch, that hurt" and "I'm never trading again." Plus, I'd have put profits to average down on NVTS at better prices instead of panic-selling at the bottom like everyone else. | 
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