Unique profit opportunities come around every earnings season. And Money Morning's options trading specialist, Tom Gentile, has a great way to find them using the best options trading strategy.

As Q3 earnings roll on, we're going to show you how Tom applies his best options trading strategy to maximize gains.
 

The Best Options Trading Strategy for Earnings Season

Tom has four main criteria for winning stocks. Basically, he wants sound stocks for which the stock price and options volatility typically move higher ahead of the earnings announcement.

Here are his criteria:

1. 100% winner over the past four earnings periods – the price has to rise heading into earnings each and every time.
2. Proper options volatility – options volatility has to rise heading into earnings.
3. Return on investment (ROI) at least double digits – the potential gain has to be worth the risk.
4. Nice distribution of winning percentages over the last four earnings periods.

For October, Tom's screen turned up three potential trades: KeyCorp (NYSE: KEY), Equifax Inc. (NYSE: EFX) and Stanley Black & Decker Inc. (NYSE: SWK).

The strategy is to buy options on these in the days leading up to their respective earnings releases and then sell the day of the release before the actual report comes out. Just like a ticket scalper.

KeyCorp already announced earnings this quarter. Both Equifax and Stanley Black & Decker are expected to announce on Oct. 24. So it is too late to trade any of these. But we can see how they did, using Stanley as our example.

And you will want this in your pocket next time earnings season comes around.

Tom suggested his subscribers trade SWK any time after Oct. 4 and sell on earnings day Oct. 23.

As you can see in the chart below, SWK's share price has risen ahead of its last four earnings calls, including this one. And it was a home run for traders who acted on Tom's advice.

On Oct. 4, Stanley stock closed at $140.97, just a few cents from its high for the day. After a two-day drawdown, the stock closed at $151.36 on Oct. 22 and is trading above $153 today, right before earnings. That's a gain of 8.7% from the closing price on Oct. 4. And options could've amplified these gains into the triple digits.

Not bad for 12 days' work. Stanley checked all the boxes and delivered a winner.