This week Mike Smith reports direct from the Hawkeye Options desk.
Here we go again – out from the woodwork they come…
Its earnings season and so out pop the latest plethora of NEW; INNOVATIVE; EASY; PROVEN etc. etc. headlines about a strategy that has been around as long as options have been in existence.
They say straddles and strangles are the way to trade a high volatility market (by definition it isn’t a volatile market by the way – just look at where the VIX is – there is a difference between choppy and volatile – a later discussion perhaps).
They will promise that this new (lol!) innovative strategy, where you buy a call and a put, an each way bet if you like…as THE ONLY way to make money in this market
(AND of course Barracuda at 191% end of day last session in less than 7 months is evidence that this is nonsense).
They will fail to mention that options prices go up pre-earnings – a little thing called implied volatility – (which is in simple terms, a forward looking measure based on how likely something could move from its current position – in an individual option position there is NO time when this is at a temporary high just before an earnings report). So you can pay over the odds for a call and pay over the odds for a put, and the underlying has got to make a massive movement for you just to break even.
Perhaps we will run a session on this, as there are ways to overcome such issues, but we have other fish to fry right now…just be aware.
A happier note…
Onto the happy stuff. As we are in week 1 of earnings season, I have put a blog post up at HawkeyeOptions.com that may be interesting. This explores the reasons why the pessimism pre-earnings (as seen in the recent market pullback) may lead to a continuation of the bull market we are still in (see the weekly trend in the SPY). You can read more here.
And after earnings..?
So, we are in a new quarter and as usual I am going to run a FREE open session, which looks into the crystal ball (which has been on the button the last 6 quarters these have been running).
Where you will hear
- Our predictions for US and global equity markets this quarter.
- Which strategies may work and which to avoid (as they are likely to rip away huge chunks of your capital).
- The 5 things you MUST monitor this quarter to ensure you are at the front of the pack when things are likely to change.
- Our predicted date for the next market correction and the catalyst that may drive it.
- Where next for precious metals (and this may surprise you)?
- And we will be revealing 4 stocks that are most likely to outperform the market between now and the end of June.
Although with an equities/options/ETF bias, whatever you trade this is ESSENTIAL information. You can register here.
This is simply a service we offer to all those who have expressed an interest in what we do and is a NO SELL zone session.
Feel free to share this link with others as it IS an open session.
Watch YAHOO…yesterday’s earnings attracted some massive buying interest in after hours trading.
As always…trade safe and learn with passion.