Posted in
Daily Report
By: Tom Gentile
on February 1st, 2022
During Earnings Season Price Volatility Happens
Prices on stock coming up on their quarterly earnings announcement can run higher or lower into earnings depending on investors belief in whether they believe the company will meet analysts earnings expectations or not.
You can see stock pulled higher and lower because of the carrying bull and bear expectations amongst investors.
You can also see Indecision in a Market Amongst Options Traders
It is not uncommon to see unusual option activity in both Call and Put options going into an earnings announcement. Look at the two images from my app Toms Option Tools (also found on my website www.tomsoptiontools.com).
You can see the Highest Option Volume scan shows a Call Option on Cleveland-Cliffs (NYSE: CLF) and the Unusually High Put Option Volume scan shows a Put Option on CLF in its top 10 ranking.
Option Strategy to Consider
I am not going to pick which one of these to pursue. I WILL encourage you to learn the option strategy called the Straddle. One way my team of Options Strategists and I teach this strategy is consider buying to open a Call and a Put option with the same strike price and expiration.
Anticipate closing the trade win, lose or draw prior to the earnings announcement.
Earnings are due to report for CLF on February 11 Before Market Open (BMO).
App: Toms Option Tools
Toms Option Tools scan the markets for bullish and bearish trade opportunities using our proprietary scans and strategy algorithms. TTR Darknet finds bullish entries based on triple stack channel collisions. Money Calendar identifies seasonal patterns with at least 90% accuracy looking back 10 years. Weekly Cash Clock finds short term opportunities that last a week on average. Microcurrency Trader applies Darknet technology and moving averages to cryptocurrencies. Velocity Trader utilizes volume spike and Velocity indicators on custom stock lists. Quantum Scripts scans the markets for momentum acceleration signals and employs Quantum noise filters. Optimal Trader finds directional pre-earnings opportunities that are optimized for entry date, stock movement, and volatility surge. My Trades tracks the profit/loss of your trades, displays stock charts and risk graphs, creates new trades, and edits existing trades. Morning Report provides top 10 option rankings in 6 categories each day.
Disclaimers
Stock and options trading has large potential rewards, but also large potential risk.
You must be aware of the risks and be willing to accept them in order to invest in the stock and options market. Do not trade with money you cannot afford to lose.
This is neither an offer to buy/sell/ or recommend a particular stock or option.
Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been actually executed, the results may have under or overcompensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with hindsight.
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