When it is earnings season day traders get excited. It increases the volatility in the market to open up more trading opportunities. The stocks that are reporting earnings before the open or reporting earnings after the close tend to always have more volume and activity.
Today July 25th is in the earnings calendar one of the biggest days of the earnings season. I love EarningsWhispers.com for seeing the upcoming earnings in both calendar format and also individual breakdown with expected earnings results.
Here is today’s earnings Calendar. You can see this morning before the bell there were 156 companies reporting and 152 to report after the bell. Not only are there 152 reporting but some of the strongest stocks in the market such as AMZN, GOOGL, GOOG SBUX, INTC,
SPY ETF Holdings
These are part of the SPY and QQQ ETFs and when they have a big gap it can affect the market overall. To give you some idea of the strength that they have in affecting the market here is their weight in the ETFS.
$AMZN is 3.29% of the $SPY and 10.31% of the $QQQ
$GOOG is 1.39% of the $SPY and 4.17% of the $QQQ
$GOOGL is 1.36% of the $SPY and 3.67% of the $QQQ
$SBUX is 0.44% of the $SPY and is 1.27% of the $QQQ
$INTC is 0.94% of thh $SPY and is 2.67% of the $QQQ
I use ETFdb.com for my stats. A great resource to find out the holdings in ETFs and what ETFS hold a certain stock and the weight within the ETFs as well as overall shares held.
So overall we have 7.42% of the $SPY ETF reporting tonight and 22.09% of the $QQQ ETF reporting tomorrow. So this could cause big moves in the indexes tomorrow and the market overall. So how do you possible trade this into earnings
Options Trading Strategies Earnings
As Ricki the Options Whisperer from the Java Pit Trading room says, Options have options. There are 101 different ways to trade options, but this will help you with some simple strategies and concepts into trading them with earnings.
The number one important thing to remember with options into Earnings is that the Implied Volatility goes up and so does the cost of the options. Below is a screenshot from Think or Swim and their estimated Market Maker Move in Yellow.
So you see that the estimated Market Maker Move is 68.345 points. This could be either a gain or a loss with earnings. There are never any guarantees in trading.
In option chains you can see that the Market Maker Move is priced in with the premiums on the options so if you were to go outside of the Market Maker Move you would like be making better money if it moves further.
So the expected range for Amazon to report is 1993.1-68.35 =1924.75 or above 1993.1+68.35 = 2061.45. This is a very wide range and sometime AMZN can move over 100 points in a day.
Now options trading overnight into Earnings is a Gamble. There is no way to know where the price will open. The market will decide the direction. Many time the larger traders in the market already have a hint of what will happen and make their trades days or weeks before the report comes out.
I can’t advise you what to do in trading, but in my opinion unless you want to place a lotto trade into earnings for profit knowing you can lose 100% It is better to trade up to earnings with options and then the stock the day of earnings.
Options as Insurance
If you are a longer term investor there is always the possibility to buy options as insurance for your position. So say you have 100 shares of AMZN that you have been holding as it has been gaining in value.
As a vertically integrated company there has been a great amount of growth not only in the Retail Sector but also in their cloud services and now airline and robotics and potential crypto currency.
Back to insurance for your position. So you have your 100 shares and you are worried potentially about the DOJ saying they have to be broken up, or Bezos having to sell shares with his divorce or whatever the cause. Earnings is tonight and you want to make sure that those shares are protected in case of massive drop.
Knowing that the Stock has a $68 projected move you could buy cheaper options to protect yourself. You could do that on $AMZN options or also on $QQQ options as you know that it is 10% of the ETF and could case a big move.
You could buy 1 put contract on $AMZN expiring tomorrow Juy 26th at 1920 in case it had a bigger drop. The cost of that option in writing this would be 10.5 roughly or $1050 and if you had your 100 shares drop down there roughy $73 that would be a $7300 loss.
Another potential option would be an ETF that has lower cost options and might still have a big potential move. In going through the ETFS holding AMZN that have weekly options QQQ , XLY and IVV are potential option considerations. We know AMZN is 10.31% of QQQ, 23.53% of $XLY and 3.3% of IVV.
$QQQ is expecting roughly $1.93 move into tomorrow, $XLY is expecting roughly $1.26 move and $1.6 for $IVV into tomorrow.
Now we can look at the costs for that move for $QQQ to 191.5 puts for roughly $2 move it would be roughly .28 cents for $XLY a $1.26 move would put us at 122 puts costing .21 cents and finally $IVV drop would put us at 300 put roughtly .25 with wide spreads.
It looks like $XLY might be the best option to hedge in this scenario as the puts are less expensive and you could buy 50 contracts if you wanted to equal the cost of 1 AMZN put contract.
All thoughts on how you could possible protect you investment with $100 or 5 122 puts on $XLY expiring tomorrow. And as we know insurance in life is only good when you use it. If the stock gaps up you will be gaining that $100 on your 100 shares in a $1 gap up. This is the protection if you have a gap down.
Trading Options after Earnings Reporting
First of all if you have ever traded options you see that the implied volatility and cost of the options are always higher in the first couple minutes of the market open with the volatility of the stock. Once the stock settles into a direction the prices of the options drop.
Well on Earnings Day that implied volatility from the day prior drops back to normal morning open. If the market makers move was 68 pintsand it moves 60 points you might even see that you have a bit of a loss depending on what option you bought.
In the above example of buying out of the money options as insurance the implied volatility will only cover the drop and really become profitable when those options become in the money.
There are other options to trading options into earnings, with butterflies, strangles, straddles and more. Some even selling close up options and buying out a week. The abilities to use options to trade is limitless.
Bottom line is trade with proper risk management and be cautious of holding through earnings and prepare yourself for that potential move that is coming in the market tomorrow.
Tonight could be a pivotal night in the direction of the market. It could catapult is into the next new highs or it could be the beginning of the drop that everyone has been talking about.
I love hearing feedback from you. It makes my trading more personal and I like to hear how I can help you. If you would like to be in Training Pit with me sign up here or if you want one on one training you can email me jane@thedarkpools.com You can contact me here or Twitter (@ItsAirplaneJane), Instagram (missairplanejane), LinkedIn and Facebook (@sugarairplanejane) or YouTube
The tool I use for scanning and alerting is Trade Ideas who offer an always free trading room. You can receive 5% off with Promo code CARPEPROFIT15 all caps when you sign up here for your first year or month
Trade Ideas will be offering the quarterly full access test drive of their software their software in Nov 2019 for the cost of data fees $9.
Another amazing software is Trendspider that has a new innovative rain drop candlestick that shows the volume for the morning session and afternoon session as far as the weight of it in price action. You can try them for free for 7 days here and receive 20% off with MTS20
This blog is for informational and educational purposes. I am not a registered securities broker-dealer or an investment adviser. The information here is not intended as securities brokerage, investment or as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any security or fund.
The deals for Amazon Prime Day have already started. It’s the Christmas in July sale to drive sales up mid year for Amazon. Last year the one day event was even bigger than Black Friday sales. However all of these deals are not available to everyone, they are exclusive to prime members which you can try for free for 30 days. There are some Deals exclusive to Alexa owners as well. You simply ask Alexa what deals are for you.
With Amazon as the biggest online retailer the sales that come from Amazon Prime Day Deals can create a ripple effect in the market. If the sales are higher than expected it could in turn cause Amazon to increase in price.
This increase in price would then in turn help the market to run up to newer highs. If you ever want to see what ETFs could be affected by the move of a single stock simpy go to ETFdb.com
The link above is set up for AMZN and you would quickly learn that there are 139 ETFS that could be affected by price action of AMZN. The SPY has 3.31% of its holdings in AMZN and QQQ has 10.45% of its holdings in AMZN. This information was taken from ETFdb.com. For the SPY that is the third largest holding and for QQQ the second largest holding besides MSFT. So the price action can affect the whole market.
Not only that but it can affect the rest of the Retail sector and the XRT or Retail ETF. Amazon has truly taken over the retail world and transformed it from an in store experience to an online shopping experience. It was one of Bezos visions over 20 years ago.
To me it is now Amazon shopping online first and then compare everywhere else. The interesting thing is after living in France and Italy 19 years ago to now in Canada the evolution on Amazon internationally is amazing. This is not just a simple mom and pop operation this is now global and will likely cause ripple effects in the Retail world internationally.
My tracking of Amazon quickly earned me the nickname of JungleJane in the Java Pit Trading Room. When you see what is going on with Amazon you now know how it can affect the SPY and QQQ index ETFs.
Enjoy those deals, and be prepared for this weeks announcements of the sales and how that could likely affect the price and the market overall.
I love hearing feedback from you. It makes my trading more personal and I like to hear how I can help you. If you would like to be in Training Pit with me sign up here or if you want one on one training you can email me jane@thedarkpools.com You can contact me here or Twitter (@ItsAirplaneJane), Instagram (missairplanejane), LinkedIn and Facebook (@sugarairplanejane) or YouTube
The tool I use for scanning and alerting is Trade Ideas who offer an always free trading room. You can receive 5% off with Promo code CARPEPROFIT15 all caps when you sign up here for your first year or month
Trade Ideas will be offering the quarterly full access test drive of their software their software in Nov 2019 for the cost of data fees $9.
Another amazing software is Trendspider that has a new innovative rain drop candlestick that shows the volume for the morning session and afternoon session as far as the weight of it in price action. You can try them for free for 7 days here and receive 20% off with MTS20
This blog is for informational and educational purposes. I am not a registered securities broker-dealer or an investment adviser. The information here is not intended as securities brokerage, investment or as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any security or fund.
Today I traded CTST CannTrust for a nice a nice 14% profit while taking my daughter for her final vaccines before School. So does it hold true that you should Sell the News and Buy the Hype. In this scenario I bought the bounce of an oversold stock.
For the general public it seems this becomes a self fulfilling prophecy. Why does this happen? The basic premise of Fear in trading.
The Fear of Losing Money
When people hear bad news such as a PCG Electric company announcing that with all the fires they might have to file for Bankruptcy. Over the next three weeks the investors became fearful and sold off their holdings and the stock dropped from 46 to 6. It was the fear that could have caused the initial sell off and then as stops were triggered it snowballed down the hill.
Oversold Buying Opportunities
This fearful selling can sometimes, but not always create a buying opportunity. If you have followed my blog I like seeing the stocks that have dropped outside of the Bollinger Bands and showing an oversold RSI. Sure enough this was CTST CannTrust today. In the past three days due to the news of selling illegal pot to a Danish Company according to health Canada.
This caused the stock to drop almost 50% in 3 days. This morning at open it dropped and then volume came in and the first candle had a big wick to the bottom. I jumped in at 2.85 and set a limit order to sell 75% at 3.26. Next week I’ll tell you why I chose that number. Sure enough it went to 3.27 and pulled back.
Buying the Rumor and Fear of Missing Out
When a company get hyped up that a buyout is happening the stock jumps up. Why does this happen? First the shorts usually exit when they hear the news because they become fearful that it is going to go up even more. Then you also have to people jumping in on this rise and they want to join into the momentum with a fear of missing out.
If this news is simply hype it can drop back down as quickly as it went up leaving those buyers at the top bag holding the stock. APC Anadarko Petroleum is a perfect example of this scenario. There were two instances of this when there was a bidding war for the buyout. First it jumped up to the 60s and then up to 70s.
Overbought Selling Opportunity
If this hype of a merger or a new contract turns out to be fake news. Then it creates an overbought selling opportunity for the stock. When these fake news gaps happen it creates a price outside the upper Bollinger Bands and a selloff back to the mid line. If you know the bell curve at all the Bollinger Bands outer ranges and the midline or typically 20 SMA becomes that midline.
With timing and patience opportunities appears
Trading is all about patience in finding the setups and letting the trade develop. I enjoy the oversold stocks and watching them find a bottom and retrace back some of the gap and profit. Its about creating a watch list and monitoring them, setting alerts and being away of the daily volume and daily movement for your entries and exits.
I love hearing feedback from you. It makes my trading more personal and I like to hear how I can help you. If you would like to be in Training Pit with me sign up here or if you want one on one training you can email me jane@thedarkpools.com You can contact me here or Twitter (@ItsAirplaneJane), Instagram (missairplanejane), LinkedIn and Facebook (@sugarairplanejane) or YouTube
The tool I use for scanning and alerting is Trade Ideas who offer an always free trading room. You can receive 5% off with Promo code CARPEPROFIT15 all caps when you sign up here for your first year or month
Trade Ideas will be offering the quarterly full access test drive of their software their software in Nov 2019 for the cost of data fees $9.
Another amazing software is Trendspider that has a new innovative rain drop candlestick that shows the volume for the morning session and afternoon session as far as the weight of it in price action. You can try them for free for 7 days here and receive 20% off with MTS20
This blog is for informational and educational purposes. I am not a registered securities broker-dealer or an investment adviser. The information here is not intended as securities brokerage, investment or as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any security or fund.
I have many women wonder how I trade as a mom of two under 5. I will not lie and say that it is not always easy. However if you want something bad enough, you figure out how to make it happen.
My husband and I have the belief that family comes first, so after reading Timothy Ferriss’ The 4-Hour Workweek I was determined to find a job to work online from anywhere.
It wasn’t easy at first. When I started in the daytrading world, I had a 6 month old and was trying to do too much. I was using self study when she was asleep and did not follow the rules. I blew through a $6,000 account in a matter of weeks. Why?
Follow the Day Trading Rules
#1 I didn”t follow the rules. Rules like for kids growing up are there for a reason and to establish good habits. Top recommendation I would say for a new trader now is paper trade during the learning phase and save capital for when you know what you are doing.
Did I have help with the kids when learning to trade? In the beginning I did not and quickly learned that after the blow up and I should study until our daughter was able to go to daycare in the mornings for a couple of hours allowing me dedicated time to watch the market. While she was home I still did my homework of watching the market at open.
Why at open? If you are new to trading you will quickly learn that it is important to have liquidity to get in and out of the market and the most volatility a day traders friend is in the first hour of the market.
Learning Something New Everyday
There is a lifetime worth of studying the market possible. All it takes to be profitable is find your strategy and follow your rules. Easy Right! It can sound easy, but if you are distracted in your brain with a sick child or a family issue then it can cloud your brain to distract you to break those rules.
As a good trading buddy of mine(Jerremy Newsome) says Trading is Easy, It’s just Hard. We all know what we are supposed to do it’s the act of actually doing it that is hard. Just like we know what a healthy lifestyle of diet and exercise is for us, but it takes daily choices and discipline to follow that healthy lifestyle.
The same is true in trading. It takes daily discipline to make the right choices for your trades. Sorry I digressed.
Daily Routine is important
So now as a mom trader, the mornings are all about being on a schedule to have the time to prep at my desk. I wake up roughy 6 am with the girls. We play, read, have pj dance parties and breakfast. I try to get them to daycare by 8 am in order to be back at my desk for 815-820. The more time I have to prep and plan out my trades the better.
Once at my desk I pull up my Trade Ideas Scanner which is an amazing scanning and alerting stock tool. That is where I find the stock to put on my watchlist. I am done at the latest by 915 and then have 15 min to center myself and join in the morning meeting in the Java Pit.
In a short 2 weeks. I’m excited to be able to give back and help new traders learn from the ground up in the Training Pit. If you want to join us in the Training Pit or Java Pit or even one on one training shoot me an email at Jane@thedarkpools.com and I will be happy to help you find your path as well.
Working from home is the best blessing. To be able to be present for my kiddos if they need me and work at night while they are sleeping or an hour in the morning. As the saying of Carpe Diem to Seize the Day, I want you to Carpe Profit and Seize those profits.
The new Training Pit Trading Room will be starting August 5th, and we are going to be covering things like how to use the software, how to place an order, How to read charts, How to understand Level 2 and so much more. There is a lifetime worth of information you can study in the market, but the basics are crucial. So If you or someone you know has an interest, then register here to be updated when the room is up and running.
We want to see you succeed and want to be your training wheels for you to have success.
I love hearing feedback from you. It makes my trading more personal and I like to hear how I can help you. If you would like to be in Training Pit with me sign up here or if you want one on one training you can email me jane@thedarkpools.com You can contact me here or Twitter (@ItsAirplaneJane), Instagram (missairplanejane), LinkedIn and Facebook (@sugarairplanejane) or YouTube
The tool I use for scanning and alerting is Trade Ideas who offer an always free trading room. You can receive 5% off with Promo code CARPEPROFIT15 all caps when you sign up here for your first year or month
Trade Ideas will be offering the quarterly full access test drive of their software their software in Nov 2019 for the cost of data fees $9.
Another amazing software is Trendspider that has a new innovative rain drop candlestick that shows the volume for the morning session and afternoon session as far as the weight of it in price action. You can try them for free for 7 days here and receive 20% off with MTS20
This blog is for informational and educational purposes. I am not a registered securities broker-dealer or an investment adviser. The information here is not intended as securities brokerage, investment or as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any security or fund.
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