Earnings Season Trading Strategies Amid Market Volatility
We asked two veteran traders for their opinions on the market—Tom “Sos Grande” Sosnoff and Tony “Bat” Battista.
/ZB + /ZN: Long outright futures, backing it up with short puts
/6J + /6E: Short puts and covered calls in the mix
BA: Short puts paired with long call spreads
RTY - /ES: Pairs trade — long Russell, short S&P
AAPL: Long put spreads
SPY: Selling call spreads
TSLA: Skewed short strangles
COIN: Short call spreads
With the election coming up, I'm capitalizing on the spike in implied volatility driven by uncertainty. The current price surge is all about the unknowns surrounding the outcome. This is a classic ‘buy the rumor, sell the news’ setup in action.
I will most likely fade the market on the first move, believing it will be a head fake. In other words, whatever the initial reaction is, I’ll probably position myself in the opposite direction.
Here are some of the key companies scheduled to report earnings this week. Download here or click the picture below to get the full list.
Yeserday, Oct. 29: SoFi (SOFI), AMD (AMD), PayPal (PYPL), Alphabet (GOOGL), Snap (SNAP), Pfizer (PFE), Reddit (RDT), Chipotle (CMG), Visa (V), McDonald's (MCD), BP (BP)
Today, Oct. 30: Eli Lilly (LLY), Microsoft (MSFT), Meta Platforms (META), Coinbase (COIN), Robinhood (HOOD), Etsy (ETSY), Roku (ROKU), Carvana (CVNA), Starbucks (SBUX), Caterpillar (CAT), Sunnova (NOVA), Riot Platforms (RIOT), ADP (ADP)
Tomorrow, Oct. 31: Uber (UBER), Amazon (AMZN), Peloton (PTON), Intel (INTC), Mastercard (MA), Apple (AAPL)
Friday, Nov. 1: FuboTV (FUBO), Chevron (CVX), ExxonMobil (XOM), Wayfair (W), Dominion Energy (D), Charter Communications (CHTR)
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Tom Sosnoff’s long bonds here at the lows—using /ZB and /ZN futures. If you are looking to get a bit smaller, using TLT is a cost effective way to get lng bonds. A PMCC position provides a covered call type of risk profile, long an ITM 85 strike call in DEC as the synthetic stock position, with a short 93 call in the NOV monthly to offset the extrinsic value in the long.
All currencies futures are denominated in U.S. dollars, which means a long currency position is synthetically short dollars. /M6E is the micro euro contract, much smaller than /6E and trades in $1.25 ticks. Sitting near recent lows, a long contract only uses around $400 in buying power per contract.
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Michael Rechenthin, Ph.D., (aka “Dr. Data”), managing director of research and development, has 25 years of trading and markets experience. He’s best known for his weekly Cherry Picks newsletter. On Thursdays, he appears on Trades from the Research Team LIVE.
Nick Battista, tastylive director of market intelligence, has a decade of trading experience. He appears Monday-Friday on Options Trading Concepts Live. On Wednesdays, he co-hosts Johnny Trades. @tradernickybat
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