Strategies On How To Play The Stock Market During Earnings Season
Post on: 1 Апрель, 2015 No Comment
ALCOA (AA), is actually the bell weather sign that earnings are upon us again. AA is the very first major part of the DOW to report and it is the unofficial signal that the earnings cycle has begun. The fact is that earnings doesn’t stop.
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Even though the numbers may dwindle to a trickle at times, there are companies reporting constantly. But now we will see a swell of day-to-day reporting that builds to as much as 3-400 per day over the next two weeks.
Then it’ll peak and drop off again sharply. Not all exciting businesses report during this period. In general, most of the companies you know will report over the next three weeks.
Now, what thing is it best for you to invest in? Could you invest inside stocks? How about Houses and Land? What about all of these risky HYI Programs? Or on the other hand, are precious metal stocks the best?
The reporting excitement has an overall effect on the market. While organizations can benefit from reporting very good information while everybody is watching, the earnings cycle can also work against them should they get caught up in a list of 300 companies reporting that day.
Also a couple high profile companies can influence the market for a few days. Others will probably be swept along with the momentum regardless of what their earnings had been. It’s tough to report great news on a bad day.
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So, some ideas on how to play the market during the earnings season:
First — find out what day your business is going to report. The most effective way to verify would be to call the company investor relations department.
2nd — Time of day is really important to traders. The young man could not tell me what time of the day the data could be released. This is quite common for a firm to have a standing policy for release time, however it is not guaranteed
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Third — Play or No Play. If you don’t have practical knowledge playing earnings you must do some learning and practicing. There are specific earnings plays that may work well. Guessing just isn’t a good one.
4th — History. The history of the stock can be really valuable.
Fifth — Option Pricing. The price of options can be a big tip off. High volatility can produce huge time premium which usually gets decreased dramatically after the earnings come out.
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6th — Time of the month. It may be fine to enter a trade by purchasing a Call or Put even if there is only a week left until expiration if you will only be in it for one or two days.
Seventh — Techniques. The riskiest and best profitable earnings play is the one sided Long Call or Put. Once again, it is a crap shoot and should be played with Very disposable cash. Most often some sort of combination play such as a Strangle or Straddle is utilized.
So, please have fun throughout earnings season, but be careful. Know where your skill level is just before you put money into trades. Don’t be afraid to play earnings. You will not learn as much or as fast on the sidelines and you don’t need to put very much money into the trades to practice in real time.
You need to practice perfectly and that means get trained correctly. The most valuable advice can be obtained from an experienced investment consultant. To locate the most reliable investment specialist search: shell company, public mergers. or merger companies. Don’t forget, practice makes perfect!
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