If you are like me, you enjoy trading in and around earnings season.
I find the best way to go about it is to trade ahead of earnings, taking most or all of the position off ahead of reporting, or post earnings which allows me to take in more information.
So, I thought I would share a few examples of to highlight both scenarios.
Before we get to the charts, I want to thank all of you for your support of A Trader’s Education. We just crossed 500 subscribers!
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Alright, enough gushing and on to the charts.
First up is AMZN, which has a nice set up for a swing trade higher.
After a strong earnings report, AMZN has started the week by launching off of volume shelf at $129.
This got the price above the 50-day simple moving average (SMA), saw a bullish crossover for the MACD, and RSI jumped above 50.
All in a day’s work for AMZN.
I am looking for a break above the October 12th high of $134.48.
If AMZN pushes through, I like targeting a run to $142 fairly quickly.
On a move above $134.48 I like considering buying the $136 strike calls and selling the $142 strike, both expiring November 24th.
The net cost should be around $2 per call spread contract (buying one call strike and selling a higher strike). The max gain is the difference between the two strike prices, which is $6 or a triple.
Now let’s look at SOFI.
Another post earnings play but in the other direction.
After all of the positive news premarket, shares gapped up only to sell off nearly all day and close back below $7.
This was after reaching $7.88. Just a massive sell-off and I think it continues.
I’ve got a target of $6 for SOFI for November and like using slightly in-the-money puts expiring at month end.
If you like the opportunity to buy SOFI at $6 there could be an opportunity to do so at a slight discount by selling cash secured puts.
If you want to learn more about how I use CSPs, drop a comment or message me on X (Twitter) @tradernatehere and I’d be happy to go into detail.
Last up is a favorite, DKNG.
DraftKings has found support at the bottom of its range just days ahead of earnings.
The 150-day SMA is also showing up right at this $26.41 support level.
I like a bounce here and move towards and above $30.32 which is the top of the range, rounds 12% higher from here.
I think there is a chance it can move even higher if guidance is strong for the remainder of the year and into 2024.
Similar to AMZN, I like to use call spreads but for DKNG I would be trading this week or next week’s options heading into earnings Thursday, after the close.
I like to close out most if not all of my position ahead of earnings and take the win or loss before the big move.
Thanks for tuning in! I appreciate your support of A Trader’s Education and hope you have a great day!
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This service is for general informational and educational purposes only and is not intended to constitute legal, tax, accounting or investment advice. These are my opinions and observations only. I am not a financial advisor.
Trading Earnings - Before and After the News