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In July, traders at Lyft Inc. (LYFT) anticipated the company’s earnings report set for August 6, noting that the options market was underpricing the expected price swing. The straddle implied a 16% movement, while Lyft historically moved closer to 20% following earnings. Traders executed a volatility-based strategy instead of making a directional bet, which paid off after co-founders announced their resignation, leading to a share price jump of over 10%.
Traders emphasized the importance of a disciplined approach, highlighting that the straddle returned around 5%. They noted that successful trading requires a robust process, strong conviction, and strict discipline to manage risks. Despite short-term losses in trades, maintaining these principles ensures survival in fluctuating market conditions.
Overall, the experience demonstrated that a grounded trading mindset, built on research and discipline, can lead to profitable outcomes even amidst adverse market reactions.
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