Profit Pregame

How NOT to Trade Earnings This Week

One of the best times of year to hunt for low-priced, fast-moving options trades is during earnings season… which gets started for real this week.

But there’s no way I’m going to jump all over every earnings name that hits my options scanner.

In fact, lots of times, an upcoming earnings report will be an automatic DQ for me when I’m sorting through the day’s top scans.


Well, because upcoming earnings reports pump up implied volatility – a key component of options prices. Since my scanner is designed to target options under $1.00, you can imagine that I’m not a big fan of overpaying for high volatility expectations ahead of earnings.

Plus, all of that IV gets flushed out of the option immediately when the earnings are reported, as the news is priced directly into the underlying. So buying and holding options through an event can be a losing move even if the stock moves in the right direction.

Rather than trying to gamble on which way a stock’s going to move after earnings – and paying through the nose for IV – I’m going to keep a close eye on my scanners for low-priced options that give me opportunities for quick returns (day trades and longer-term swings).

What’s happening?

That said, I’m always keeping an eye on some of those mega-cap Big Tech names for 5-minute bar buy signals… and a few key names are reporting this week that could move the whole sector.

So while I’m not looking to play through earnings with options, I’ll be looking for trade opportunities to develop in the early minutes of the session on big-cap names – potentially driven by some of these notable reports:

  • Netflix (NFLX) – reports after market close (AMC) Tuesday, Oct. 19
  • Verizon (VZ) – reports before market open (BMO) Wednesday, Oct. 20
  • IBM (IBM) – reports AMC Wednesday, Oct. 20
  • Tesla (TSLA) – already a 5-minute bar winner last week – reports AMC Wednesday, Oct. 20
  • Intel (INTC) – reports AMC Thursday, Oct. 21

These 5 reports could be the catalysts for some nice day trades or weekly options plays, so keep these key earnings on your radar this week.

I’ll be in touch soon – have a great Monday, traders!

Andrew Keene

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