by Gavin M.
I have been a strong opponent of traders who buy options going into a an earnings report. Why, you may ask? It's simple because the premium is sky high. You literally need a huge move to even make a meager amount of profit from your bloated option.
LNKD almost made the Call buyers and bulls happy but it quickly dropped after on concerns of revenue and etc. I never truly care much about what the financials and the executives say because unless they're Twitter, they are just saying stuff to make investors happy.
What is a huge problem in the option trading community is the lack of option trading knowledge. People see a bunch of Twitter users do one thing and they just follow blindly without even learning what the implications are of their purchase. IV is a significant factor in increasing option prices ahead of a big event like earnings.
Let's take LNKD for example. Options that were normally priced at $3 or $4 are on sale for $12 ahead of today's earnings. You would at least need a $15-$20 move on the price to get a decent amount of profit. If you don't know why you need a $15-$20 move to even eke out some gains, then you really need to learn options and how to properly trade earnings.
We're creating a customized set of class videos geared towards Options Theory and how to apply them to earnings. We also will include how we trade earnings as well.
Equity Sense Options and Earnings Class
- Option Theory Relevant to Earnings
- Profitable Option Techniques to use during Earnings
- Trading Earnings using Shares and/or Options
Cost: $1,500 (USD)
Delivery: Videos On-Demand
To Order: CLICK HERE
*classes w/ an instructor will cost more
by Mike Lim
There has been no doubt that oil was oversold as the technicals have shown there to be very low RSI level. Oversold indicators were going off as it continually hit the $47 level. The fumes were already there, it didn't take long for the fire to start. Add to this a bullish API and EIA report, we got our dead-cat bounce. Saudi even added fuel to the fire by saying they were going to cut production by the end of the summer.
This goes back to what we have been saying at Equity Sense that the more you see these kinds of events, the more you no longer believe in coincidences. However, at the end of the day, it all boils down to a few things:
1. Do you believe the Saudis?
2. Will you go long Oil knowing Iran is now in the mix?
I remain bearish on oil in the medium to longer term. Although in the short term, anything goes.
Traders from Equity Sense will be writing on this blog on positions and other market-related things.