should i buy stocks or options before an earnings report? // stock earnings announcement trading strategy, trading earnings with options, stocks ipo welcome to looking at the markets withdavid moadel today we'll be answering a questionshould i buy stocks or options before and earnings report big gains or biglosses when earnings reports are about to be released this might seem like aperfect time to bet on the future direction of a stock or option
apple share price pre market, after all if your directional bet turns out to be correct you can make biggains on the other hand if your directional bet is wrong you could sustain a big loss to makematters worse the price of your options
is likely to decline somewhat due to thepost earnings drop in implied volatility instead of making pre earnings bets haveyou considered post-earnings trades options are a good vehicle for thisstrategy because the post earnings implied volatility decline tends to makeoptions less expensive thus if there's a big earnings miss callprices decline not only because of the decline in theprice of the underlying stock but also because of the post earnings impliedvolatility decline it's amazing how a good company can havefive consecutive earnings beats and then one earnings miss and everybody freaksout the market tends to overreact
so by good companies after an earningsmiss not before weight of few days before you jump in however letthe dust settle and give the market time to come back to their senses besides you'll want to wait a few daysor more while analysts like goldman sachs morganstanley and citigroup probably downgrade the company after its big earnings missa good example is when apple dropped eight percent immediately after anearnings miss on april 20 6 2016 if you had witnessed the earnings missed andthen waited a couple of weeks while the dust settled
you could have bought apple at a goodprice so here's apple and then big earnings miss and then for a couple moreweeks it went down some more but then it wentup quite a bit after that so if you had bought here or better yethere you would have done well now i only recommend using this strategy with highquality stocks and etfs that have withstood the test of time talking aboutmega cabs blue chips things like that plus as with any market trade exercise caution please and use smallposition sizes always in earnings play doesn't have to be a gamble or a riskymove
wait until the market regains itscomposure and you'll see how patients as usual pays off so if you'd like more help with this orany strategy and the markets finance stocks options and so on feel free to contact me my name is davidmodell and you can reach me by email anytime at david modell @ gmail.com i hope to hear from you soon thanks alot ok
