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Thursday, July 28, 2005

Trading during Earnings Season

There is a post in Earnings Trader blog that writes a little about trading in earnings season. He focuses on straddles, this is what I also do occasionally. Straddles are definitely not free launch in Wall Street, but if you are good enough in picking the right stocks, then it can be profitable (like any other strategy or trading system).
There are many traders who often use option straddles to play earnings. Basically, with straddles you dont care which way the stock moves. All you care is that it MOVES. A long straddle is long 1 call and long 1 put at the same strike price and expiration and on the same stock. Such a position makes money if the stock price moves up or down well past the strike price. The beauty of this approach is that risks are limited, and there's a potential unlimited (hmmmm) profit potential.

As they say, every system, every model, every style, generates losers eventually. But in trading, if we can win two out of three times, and exercise sound money management principles, we can generate profits.

Here are a couple of links that describe in brief how straddles work.

Event-Driven Trading

Straddles and Strangles
Read further:
earnings trader: Earnings report for July 29

5 Comments:

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10/26/2005 03:36:00 PM  
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10/26/2005 04:55:00 PM  
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10/27/2005 09:26:00 AM  
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11/14/2005 08:07:00 PM  
Anonymous Penny Stock Trading Tips said...

What about buy and hold not forever and ever but it could be for a considerable period of time. Their are stocks like petsmart that traded at 2 dollars a share 10or 11 years ago now the stocks almost fifty. Also pricesmart traded at about 7 dollars a share about seven or eight ago now its almost around sixty dollars. Their are many other examples Apple computer traded ar only 5 dollars a share in 1998 now its over 400. These stocks are being held quite a long time generally speaking I would say four to six years would be about right as far as buy and hold go. I have a website where I have been following stocks under five dollars. I generally hold my stocks anywhere form 2 to 6 years.

12/07/2011 01:20:00 PM  

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