Our experts weigh in on earnings

One word defines all their feedback…

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OCTOBER 15, 2024       Howdy y’all, It’s earnings season right now, and, I’ll admit it… As a fairly rookie trader, I don’t have a super great grasp of earnings yet. I mean, I understand what’s going on of course: every three months, companies have to give a report to their shareholders about the health of the business and their prospects for the future. These reports are public, and traders, whether shareholders are not, will react (or often overreact) to the news in real-time, because it's their best insight into a company’s fundamentals. The overreactions will create huge moves in either direction in the stock market, and it’s often hard to predict which way things will go — even if all the news seems good (or bad)! So that’s the basic outline… But I thought to dive a little deeper, I’d ask our experts to weigh in.  I asked them: what's one thing traders need to be particularly aware of as earnings season kicks into high gear? I got some great answers from three of our experts. Let’s hear from them!    Trade like a MACHINE…   Unleash the power of Automated Options in your accounts and see how straightforward it can be to target 50% returns each week with trades that (if everything works out) close out automatically… meaning you NEVER have to stare at your charts! Discover the incredible breakthrough here “The reactions in the stock prices usually have little or nothing to do with what gets reported. Earnings can be closer to a coinflip than a predictable event to trade. You should tread with great caution.” Of course, anyone who knows Jeffry Turnmire knows well that he’s a technical trader. So news events aren’t high on his radar to begin with. But his wisdom here is very sage (as it usually is). As I mentioned earlier, you really cannot possibly predict how traders will react to “the news” — if that even is what they’re reacting to. NVDA can report record earnings for the fourth or fifth time in a row only to watch the stock fall lower and lower… Some other company might report disastrous revenue numbers but hint at one program for the future that gets traders excited and sends the stock higher. It’s really NOT logical, so you should always be cautious and, if you’re going to trade earnings, remember that it’s really more of a “lottery ticket” than anything else. Which pairs perfectly with Nate’s reminder…   “If you are trading earnings with regular calls and puts, you are much braver than I am!” Nate’s answer was short and sweet. As you probably know, Nate and Graham are both huge fans of spreads, and both would tell you that they’re actually super simple and generally much safer than basic calls or puts. There are a lot of reasons for this which we’ve gone into before and will again, but the best part about credit spreads in my mind is that they give you total control over your risk. Yes, you can lose 100% of your investment with a spread like you can on almost any trade (even stocks, theoretically)...  But you’ll know exactly how much that is, and with spreads, it’ll usually be a lot LESS than a regular call or put. Especially with the IV around earnings season jacking up the price of calls and puts even higher! So, if you want to be brave (or said another way, reckless), you can trade earnings with calls or puts. But if you want to follow our experts, you should get comfortable with spreads! Speaking of traders who love spreads, here’s Graham:   “Beware of the correlated tickers... for example, if you own or trade LYFT, and UBER gets drilled on earnings, your stock may be affected.  Most people wouldn't think to check -- however that too is a coinflip because if UBER falls it might mean LYFT is eating its lunch and taking market share.” This is a really, really important thing that I think gets ignored too often. Correlation is a powerful force in the stock market. It’s what makes our amazing pairs strategies that both Geof and Nate love work so well. But it can also be a trapdoor for traders who aren’t paying attention. Like Graham said, you might not even be aware of Uber’s earnings reports if you’re not trading it, but if you have a LYFT position, you’d better be! Because the bottom can drop out real quick if you’re not careful. In the end, I think all of our traders would agree: earnings trades are a coin flip, a gamble by their nature, and you should be cautious. Sure, they can turn into some pretty big home runs. And if you’re in for a “lottery ticket” type of trade, then they can be a ton of fun!  But you really need to be cautious and you should build your whole portfolio around earnings by any means. Let me know if this kind of email is helpful to you and I can send more like it! To your prosperity, Stephen Ground Editor-in-Chief, ProsperityPub

OCTOBER 15, 2024 Howdy y’all,   It’s earnings season right now, and, I’ll admit it…   As a fairly rookie trader, I don’t have a super great grasp of earnings yet.   I mean, I understand what’s going on of course: every three months, companies have to give a report to their shareholders about the health of the business and their prospects for the future.   These reports are public, and traders, whether shareholders are not, will react (or often overreact) to the news in real-time, because it's their best insight into a company’s fundamentals.   The overreactions will create huge moves in either direction in the stock market, and it’s often hard to predict which way things will go — even if all the news seems good (or bad)!   So that’s the basic outline…   But I thought to dive a little deeper, I’d ask our experts to weigh in.    I asked them: what's one thing traders need to be particularly aware of as earnings season kicks into high gear?   I got some great answers from three of our experts. Let’s hear from them!    Trade like a MACHINE…   Unleash the power of Automated Options in your accounts and see how straightforward it can be to target 50% returns each week with trades that (if everything works out) close out automatically… meaning you NEVER have to stare at your charts!   Discover the incredible breakthrough here “The reactions in the stock prices usually have little or nothing to do with what gets reported. Earnings can be closer to a coinflip than a predictable event to trade. You should tread with great caution.”   Of course, anyone who knows Jeffry Turnmire knows well that he’s a technical trader. So news events aren’t high on his radar to begin with.   But his wisdom here is very sage (as it usually is).   As I mentioned earlier, you really cannot possibly predict how traders will react to “the news” — if that even is what they’re reacting to.   NVDA can report record earnings for the fourth or fifth time in a row only to watch the stock fall lower and lower…   Some other company might report disastrous revenue numbers but hint at one program for the future that gets traders excited and sends the stock higher.   It’s really NOT logical, so you should always be cautious and, if you’re going to trade earnings, remember that it’s really more of a “lottery ticket” than anything else.   Which pairs perfectly with Nate’s reminder…   “If you are trading earnings with regular calls and puts, you are much braver than I am!”   Nate’s answer was short and sweet.   As you probably know, Nate and Graham are both huge fans of spreads, and both would tell you that they’re actually super simple and generally much safer than basic calls or puts.   There are a lot of reasons for this which we’ve gone into before and will again, but the best part about credit spreads in my mind is that they give you total control over your risk.   Yes, you can lose 100% of your investment with a spread like you can on almost any trade (even stocks, theoretically)...    But you’ll know exactly how much that is, and with spreads, it’ll usually be a lot LESS than a regular call or put. Especially with the IV around earnings season jacking up the price of calls and puts even higher!   So, if you want to be brave (or said another way, reckless), you can trade earnings with calls or puts.   But if you want to follow our experts, you should get comfortable with spreads!   Speaking of traders who love spreads, here’s Graham:   “Beware of the correlated tickers... for example, if you own or trade LYFT, and UBER gets drilled on earnings, your stock may be affected.    Most people wouldn't think to check -- however that too is a coinflip because if UBER falls it might mean LYFT is eating its lunch and taking market share.”   This is a really, really important thing that I think gets ignored too often.   Correlation is a powerful force in the stock market. It’s what makes our amazing pairs strategies that both Geof and Nate love work so well.   But it can also be a trapdoor for traders who aren’t paying attention.   Like Graham said, you might not even be aware of Uber’s earnings reports if you’re not trading it, but if you have a LYFT position, you’d better be! Because the bottom can drop out real quick if you’re not careful.   In the end, I think all of our traders would agree: earnings trades are a coin flip, a gamble by their nature, and you should be cautious.   Sure, they can turn into some pretty big home runs. And if you’re in for a “lottery ticket” type of trade, then they can be a ton of fun!    But you really need to be cautious and you should build your whole portfolio around earnings by any means.   Let me know if this kind of email is helpful to you and I can send more like it!   To your prosperity,   Stephen Ground Editor-in-Chief, ProsperityPub

ABOUT US:  We believe that the opportunity for financial literacy and freedom belongs to all people, not just those who already have years of investing experience. Prosperity Pub provides an array of educational services and products that will help you navigate the markets and become a better investor. Trading is made simple through our online forum full of trading techniques to give you the best tools to kick-start your investing journey. We offer collaborative webinars and training; we love to teach. No matter the opportunity, we bring together a strong community of like-minded traders to focus on analyzing market news as it’s presented each day. DISCLAIMER: FOR INFORMATION PURPOSES ONLY. The materials presented from Prosperity Pub are for your informational purposes only. Neither Prosperity Pub nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational purposes intended is at the user’s own risk. DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. Prosperity Pub is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions.  Please visit https://prosperitypub.com/terms-conditions/ for our full Terms and Conditions. Unsubscribe This email was sent to edwardlorilla1986.paxforex@blogger.com by Prosperity Pub 101 Marketside Ave, Suite 404 PMB 318, Ponte Vedra, Florida 32081, United States Prosperity Pub

ABOUT US:  We believe that the opportunity for financial literacy and freedom belongs to all people, not just those who already have years of investing experience. Prosperity Pub provides an array of educational services and products that will help you navigate the markets and become a better investor. Trading is made simple through our online forum full of trading techniques to give you the best tools to kick-start your investing journey. We offer collaborative webinars and training; we love to teach. No matter the opportunity, we bring together a strong community of like-minded traders to focus on analyzing market news as it’s presented each day. DISCLAIMER: FOR INFORMATION PURPOSES ONLY. The materials presented from Prosperity Pub are for your informational purposes only. Neither Prosperity Pub nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational purposes intended is at the user’s own risk. DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. Prosperity Pub is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions.  Please visit https://prosperitypub.com/terms-conditions/ for our full Terms and Conditions.   Unsubscribe This email was sent to edwardlorilla1986.paxforex@blogger.com by Prosperity Pub 101 Marketside Ave, Suite 404 PMB 318, Ponte Vedra, Florida 32081, United States Prosperity Pub