I have some bad news, everybody…
I managed to drag myself through the first hour of trading with my members today, but I had to cancel my usual Thursday appearance on Money Morning LIVE.
I just couldn’t hack any more live trading action – no pun intended.
But there was one hot post-earnings name that I know the chat was watching during the morning show – and it’s a stock that showed up on my scanner ahead of quarterly results Wednesday night.
Here’s a hot cautionary tale for ya…
Of course, one great benefit to trading options priced below $1.00 per contract is that it’s relatively “easy” to take a chance on any old idea that crosses my options scanners.
When you don’t have a ton of capital at risk, why not take a gamble – right?
But that kind of risk management attitude (or lack thereof) will only take you so far before you experience a WHOLE other definition of “diminishing returns,” guys.
That’s why I have a set of a few basic criteria I use to determine a strong signal versus a “no signal”…
And here’s why this pre-earnings play on a gaming stock was a non-starter for me. (JUMPLINE)
The SKLZ signal I skipped
Online gaming platform Skillz (SKLZ) has been a hot stock this year – and here’s the call option flow that hit my scanner on Wednesday morning:
In fact, successive blocks were coming in at higher strikes – the $14 and $17 calls for various November expiration dates.
Pretty bullish signal, right?
Maybe – but here’s why it’s so important to beware those “orange flags” in the screenshot warning us about the post-close earnings report from SKLZ on Wednesday.
Don’t get attached to a pre-earnings signal
In case you missed it, SKLZ absolutely cratered after earnings.
The stock tanked about 10% Thursday and hit a low around $10 – so anyone who held those calls off the scanner overnight into earnings likely woke up to a nasty surprise.
However, SKLZ did run higher into about midday Wednesday and held those gains into the close ahead of its poorly received report…
So, it’s possible this signal could’ve been a quick day trade idea, for those nimble enough to time the run-up trade correctly.
The point is, not every “scan idea” is created equal – and holding call options overnight into a binary event like earnings is VERY high-risk, no matter how “cheap” the options.
Today’s theme: Timing is everything
Gang, speaking of opportunities that are only good for a day – your limited time access code for my exclusive Super Squeeze Profits deal expires at 5:00 PM today.
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And if you’re not tapping into that meme stock energy, you’re missing out.
Just like you’re about to miss out on this epic deal for my most elite membership… (JUMPLINE)
When you call Gabe and his team at 877-212-9163 and mention priority code U304XB01, you can lock in the best deal ever on my Inner Circle – including LIFETIME access.
If you want to get ahead of the retail trading masses and learn how I identify stocks that are ready to spike – before they make that big money move – now’s the time to join me.
That’s 877-212-9163, and priority code U304XB01. And drop my name, too – couldn’t hurt.
I can’t wait to see you in the Inner Circle!
Founder, Profit Pregame