Earnings Plays

C

chuckybrown70

ok, i am totally new here. i have posted some questions in another thread, hopefully some of u will take time to help answer, but now i am here to contribute.

1st let me give u some background: i am 38 have an accounting degree, played poker for 6 years, plenty of business experience, been following the stock market since 14yrs old when it was like 1000 (i think). inherited 114k. started day trading on dec 10th 2008. bought a 100k portfolio on Jan 2nd consisting of

T, SPWRA, WFC, WMT, IBM, CSCO, CAT, JNJ, K, and COP.

would be down over 20% if i would have held. but luckily sold.

in the meantime, i saw the biggest moves happening on earnings report days. so i look at the calendar. see what stocks are estimated to beat last quarters earnings, research if they usually report better than estimates (min 10 of 12 periods) make sure the stock is not over bought. look at the website to get any additional insight on earnings. make sure the analysts are not all rating avoid, then buy the stock on market close. if it hits a triple play, which is earnings, reyenue, guidance it is good for a 8% to 20% move. if it hits 2 of the 3 it will break even and if it misses on 2 i try to sell immediately at all costs. in 3 weeks i am up $5600.

does anyone else have experience with this type of play?? if so please send info, also if anyone wants more info i would be happy to supply.

ENJOY
 
1) You need a larger "sample size" to judge the consistency of your method.
2) You could consider incorporating options trading into your method with a focus on the behavior of implied volatility before and after the earnings announcement.
 
I have often wondered if there is a way to game earnings announcements without simply guessing if the company will make it's numbers or not. If anyone has a strategy for this I would be very interested in hearing it.
 
Quote from nazzdack:


2) You could consider incorporating options trading into your method with a focus on the behavior of implied volatility before and after the earnings announcement.
More...

Is this in regards to the spread between the option price and the price of the underlying security? I am a bit over my head when it comes to options but your suggestion intrigues me.
 
agreed about the sample size.

today was an interesting day. i have logged a bunch of experiences in my month using this play, but this is the first time i experienced this

ESRX

it hit the triple play, earnings, revs, guidance, this stock is supposed to go up. in after market it was down .50 but that was not gonna shake me. looked like a fake out. almost bought more shares, but am i stayed strict and conservative. this morning it opened up. zipped up for about 2 minutes which was cool seemed like it was gonna reach 58.50 which was my exit point. then it started to reverse. no problem right? wrong. then it fell like a rock. i was checking all the news. unlike first solar, which directly reported that guidance was lower, there was no news, in addition the news that kept crossing the wire was positive. checked the analyst downgrades, but no news. i could not figure why this went down. if you look at the chart it was clearly in a mild upward trend and was not overbought.

this was my first frustrating trade. it reached support, broke through that easily and i had to sell at a loss.

what a joke. anyone have any insight in why this stock got crushed? if these unexplainable selloffs occur it will blow up this whole strategy because there will be no predictability or pattern. i am a bit shook up.
 
Quote from Kassz007:
........your suggestion intrigues me.
More...
1) Do you resemble Drew Barrymore or Anne Hathaway?
2) Would you like to discuss "it" over pizza and beer or wine and chocolates?
3) In a nutshell, implied volatility goes up before the announcement and plunges after the announcement. You can concoct whatever strategy you want built on that expected market behavior. :cool:
 
FSLR beat earnings and it gapped down 27pts. beating earnings

isnt always enough for a stock to rocket upwards. Analyst

upgrades/ downgrades and forecasts also come into the mix.



Play the gap after earnings instead, it reduces the 50/50 chance of being wrong and getting fucked over in a gap in the wrong direction. This is what I like to do instead.

check these

fslr
wfmi
azo
cstr
gas
 
Quote from chuckybrown70:
......unexplainable selloffs........
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1) Money moves stocks, not "news" releases.
2) In hindsight, when a stock shrugs off what appears to be bullish news, that's indicative of weakness, i.e. a lack of buying, and can leave the stock vulnerable to long-liquidation and short-selling.
3) There may be a lot of options-related trading that's impacting the stock. Live & learn. :cool:
 
Quote from nazzdack:

1) Do you resemble Drew Barrymore or Anne Hathaway?
2) Would you like to discuss "it" over pizza and beer or wine and chocolates?
3) In a nutshell, implied volatility goes up before the announcement and plunges after the announcement. You can concoct whatever strategy you want built on that expected market behavior. :cool:
More...

1) Neither. Drew Carey if anything.
2) Beer and pizza. No better combination exists.
3) I know what implied volatility is. I was more interested in your strategy for playing this implied volatility with options.
 
Quote from Kassz007:
.......your strategy.
More...
I prefer short-dated, strangles. You'll have to do what you feel comfortable doing based on your risk tolerance. :)
 
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