Trading Earnings Will Lose You Money


Manage episode 152573493 series 1063725
על ידי Joshua Belanger התגלה על ידי Player FM והקהילה שלנו - זכויות היוצרים שמורות למפרסם, לא ל-Player FM, והשמע מוזרם ישירות מהשרתים שלכם. הירשמו כדי לעקוב אחר עדכונים ב-Player FM, או הדביקו את כתובת העדכונים באפליקציות פודקאסט אחרות.
Earnings season is upon us, and usually, I receive several questions asking the best approach to using options to trade underlyings. Is it better to buy or to sell options? My answer is neither. There's no edge with trading earnings. It's taken a lot of experience and research for me to learn that. 75% of the time, the market usually priced the underlying move perfectly within the expected move. However, there's the 25% chance it doesn't. When it moves outside the expected priced range, that's when things get ugly. To name a few that have down that in the past are companies like Amazon, Netflix and Google. When prices move outside the expected range, they usually move about 2-3x the expected move. Those moves cause massive drawdowns to option sellers and wipe out all the other winners. Or gains for option buyers who may have been long options, which only gets them back to break-even for all the other losses they had. So what that means is that no matter if you're a buyer or seller of options, it's a zero-sum game in regards to trading earnings. Since there's no edge with trading earnings, I think they should be avoided. Success in the market is not about being more right; it's about avoiding costly mistakes. Some people trade earnings only to stay engaged; that's it. I will from time to time, but it's very rare at this point. If you're inclined to trade earnings to stay engaged and understand there's no edge, then look for trades with a 1:1 risk/reward such as debit spreads. Stay consistent with the amount of risk per trade. However, If you want to learn how to have an edge trading options so you can avoid losing money during earnings season then what you learn in this book will teach you exactly how to do that. To your wealth, freedom and options! Joshua Belanger

228 פרקים