Making Money Off Earnings: Short Term Speculative Trades While We Sit On Our Hands And Avoid Making Intermediate Term Trades
With the major averages having breached major support levels and our weekly market analysis using Chaikin Analytics composite Power Gauge metrics for index based ETF's flashing red, we're staying out of the market for other than shorter term "swing" type trades. With dozens of larger companies set to release earning this week, we'll keep track of our trades here (opens in a new window). Our trading style is deep end of the pool - naked short puts, calls, or both (called a strangle). Our directional bias will ALWAYS be influenced by the power gauge, so you can always shadow us with something more risk defined, such as an option spread (vertical, calendar or iron condor). We'd never trade naked positions into earnings without having a few years experience under our belt, but we'd also avoid buying long options into earnings because of the inflated impact of implied volatility on option prices. Better to be a seller than a buyer.
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