Are you a gambler? Do you crave the adrenaline rush that comes with rapid fire trading? Are you willing to take risks where others will not in hopes of breaking the bank with a huge profitable trade?
There is simply no other dependable event that triggers the volatility necessary for a big score. When using call and put options with underlying stocks set to report earnings news, traders are poised for huge profits.
The gains can be spectacular, but so too can the losses. The trick is to have a game plan and to stick with that plan throughout the entirety of earnings season. Without that plan you will truly be just a gambler.
Fortunately there is a game plan that you can follow to easily and profitably trade earnings. I call them the five keys to trading earnings and I’ve used these keys to make successful earnings trades for nearly two years now.
That track record is nice, but the future is just as bright. From the dawn of the stock market, irrational investors have always missed the mark when pricing stocks. When a company reports earnings, the market has a chance to react to the news and for a brief moment get the pricing right.
That correction happens immediately in the trading session after an earnings report is issued. The volatility is what helps propel our option trades on underlying stocks of companies releasing the news higher.
Gains can range as high as 1,000% in certain instances. The losses are capped at 100%. In isolation a losing earnings trade might be painful, but in the grand scheme of things such losses are acceptable.
Stay true to the approach and you will do just fine trading stocks of companies announcing earnings.
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On following pages are five keys to trading earnings: