Earnings Plays

steve, thanks that seems like really good advice. and yes i am treading carefully, thanks for the warning. this play has been very successful, so far could just be luck.

i will post all the plays:

ibm,spwra,wfc,v,csco,efx,k,aoc,mcrs,synt,tra,atac,bwld,genz, qsft,arrs,cpla,ko,paa,str,anf,bjri,pep,ceph,wmt,ammd,hpq,
afsi,untd,mchx,ois,pgi,spn,myl,cpb,dco,dakt,fwlt,
gti,mhs,mvl,shoo,fslr,dws

24 winners
22 losers

net profit $5600
 
Quote from chuckybrown70:

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..........

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

Look at the chart of ESRX and, as I mentioned in my other post, consider the following:
1) It's earnings, revs and guidance release was simply "news" and is not ever "supposed" to go up - or down for that matter.
Anticipating market reaction to "the news" , especially the way you are doing it, is nearly always pure speculation (highest risk).

2) Price was right near established resistance when the news was released. As such, your bias should have been to sell the news.

If you trade earnings regularly and cannot trade outside of regular market hours, your risk of losing grows exponentially imo. Losing a major chunk of your account is only one gap away.

Best to you!

Steve
 

Attachments

cash - u are exactly right. what non-sense. this is a strong stock that has outperformed the market all year. came out with a good report and got crushed. for that matter they should have come out with a bad report.

right??

see, this is one stock that does not make sense.

it happened to me with:

K and ESRX

it is rare, but it does happen. it is really an annoying phenomenon. other than that:

deck - hit - but got punished for outlook
endp - hit and agian down
rsg - missed - i played that one and was out at 21.20 very small loss
snda - hit and is up small

overall bad day for this play.

i posted this play to contribute to the forum. i really appreciate the feedback. what i am looking for is anyone else who does this play. and if they can share the experience.

one piece of info i can share is that a few of you have suggested fading the gap after the earnings move. just for research purposes. on the stocks that moved up 5 of them out of 20 are still up from my selling price and 15 are down, but more interestingly the 12 that i lost on and went down, all 12 are still down from my selling price. overall if i would have shorted from the time i sold, i would be up an additional $14k on top of the $5600 i already made (now less than $5600 of course)

thanks again for any input
 
Quote from chuckybrown70:

cash - u are exactly right. what non-sense. this is a strong stock that has outperformed the market all year. came out with a good report and got crushed. for that matter they should have come out with a bad report.

right??

see, this is one stock that does not make sense.

it happened to me with:

K and ESRX

it is rare, but it does happen. it is really an annoying phenomenon. other than that:

deck - hit - but got punished for outlook
endp - hit and agian down
rsg - missed - i played that one and was out at 21.20 very small loss
snda - hit and is up small

overall bad day for this play.

i posted this play to contribute to the forum. i really appreciate the feedback. what i am looking for is anyone else who does this play. and if they can share the experience.

one piece of info i can share is that a few of you have suggested fading the gap after the earnings move. just for research purposes. on the stocks that moved up 5 of them out of 20 are still up from my selling price and 15 are down, but more interestingly the 12 that i lost on and went down, all 12 are still down from my selling price. overall if i would have shorted from the time i sold, i would be up an additional $14k on top of the $5600 i already made (now less than $5600 of course)

thanks again for any input
More...

Every strategy will have the outliers (both good and bad), but as long as over a timeframe that you can stand, the strategy is successful and the drawdown is something you can stomach, then it's still a valid strategy.

Have you done any backtesting on your strategy?
 
yes and no. yes in the respect that i make predictions that i dont play, but no in the respect that i have not researched and tested it over time.

cash - the reason i started doing this was, i noticed that every day there were stocks hat beat earnings and had major moves. i know everyone must notice the same thing. i thought why play stocks that move a range of a dollar over a day (for instance) but play a stock that will move multi dollars or percent in one move. if i get out early on the down, but let it ride nice and strong on the up, is that not the essence of trading?

so far it works, except when it fakes me out, or i pick wrong. i think if i sharpen my criteria for picking my stocks then it would improve my profit.

anyone have any input into picking a earnings winner that moves up?
 
Quote from chuckybrown70:

yes and no. yes in the respect that i make predictions that i dont play, but no in the respect that i have not researched and tested it over time.

cash - the reason i started doing this was, i noticed that every day there were stocks hat beat earnings and had major moves. i know everyone must notice the same thing. i thought why play stocks that move a range of a dollar over a day (for instance) but play a stock that will move multi dollars or percent in one move. if i get out early on the down, but let it ride nice and strong on the up, is that not the essence of trading?

so far it works, except when it fakes me out, or i pick wrong. i think if i sharpen my criteria for picking my stocks then it would improve my profit.

anyone have any input into picking a earnings winner that moves up?
More...

To be honest, I have no idea, but I'd look for some points of correlation. For example:
Options activity the week prior to the release.
Strenght/Weakness relative to the market the week before the release.
Is the stock trending prior to the release and on volume?
Whisper numbers.
Past history for this company to see if they have a record of missing/beating.
Analyst rating changes since the last earnings release.
 
One idea is to use a buy stop (for up gaps) and sell stop for down gaps on the highs or lows from the previous candle...so for athn

you could place a buy stop .01 above highs at 35.97 or a sell stop at lows of 33.67...in this way you'll be in the trade in the right direction, and dont have to worry about buying at market, and sweating bullets if your wrong.

if you had a sell stop on athn at 33.65, you'd be up 7.58 at the time of this post.

cm69
 
now we are getting somewhere, but since i am kinda new (really new that is) i have a couple of questions:

first - your intuition is correct:

Strenght/Weakness relative to the market the week before the release.
Is the stock trending prior to the release and on volume?
Whisper numbers.
Past history for this company to see if they have a record of missing/beating.
Analyst rating changes since the last earnings release.

i research all of the above . the one i dont research is the options action. do u have insight into what i would be looking for. dont really get how the options impact or predict the movement of the stock, again that would only be speculation, NO? so i never have thought to look at it.

as for the stops, that is super important idea. most all earnings come out after market. so as far as i know, i can not use stops to help me. i do sit in front of the screen upon announcement and after doing this 40 times i can gauge pretty good when to sell and how to sell. remember with the bad news, there will be no buyers. if u know something about stops that i am missing it would be great if u can elaborate.

in general it gaps down and there is no way of stopping
 
Quote from cashmoney69:

if you had a sell stop on athn at 33.65, you'd be up 7.58 at the time of this post.

cm69 [/B]
More...

If you had the sell short stop at 33.65, how would you get filled at that price and have a 7.58 profit? It looks like it opened at about $31... that would be more like a $5 profit (granted nothing to sneeze at)

Cash
 
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