Earnings
Thursday, April 16th 2020
Reuters Article On Options Signals With Matt Amberson
Earnings announcements should move the market and the most volatile weeks are three, four and five of earnings season. Implied earnings moves come from options straddle prices.
Summary
According to a Reuters article featuring Matt Amberson from ORATS, the first-quarter earnings season could increase market turbulence, especially when smaller, more volatile companies report results. The ORATS Earnings Season report shows that the most profitable weeks for options owners on the move after earnings announcement are weeks three, four, and five of the 6-week earnings season. Implied earnings moves come from options straddle prices, and most companies' implied earnings moves are elevated versus past earnings actual moves, which should add fuel to the volatility fire experienced by the market recently.
April Joyner's Reuters article "Options markets send cautiously bullish signal on U.S. stock rally" featuring Matt Amberson from ORATS came out today. Matt Amberson is quoted:
The perspective on upcoming volatility from earnings is based on the ORATS Earnings Season report. The profitability of options owners on the move after earnings announcement, when the earnings moves are greater than expected, is greatest in weeks three, four and five of the 6-week earnings season.
Already, the earnings moves are greater than the options market elevated expectations for week-one companies, with actual moves coming in at 114% of implied.
Most companies' implied earnings moves, that are derived from the options straddle prices, are elevated versus past earnings actual moves. Below, for example, 5 of 7 companies that report today have straddle implied moves greater than past. Abbot (ABT) implied move of $3.65 is almost double its past move average of $1.92.
The earnings moves from these and many more companies to come should add fuel to the volatility fire experienced by the market recently.
Disclaimer:
The opinions and ideas presented herein are for informational and educational purposes only and should not be construed to represent trading or investment advice tailored to your investment objectives. You should not rely solely on any content herein and we strongly encourage you to discuss any trades or investments with your broker or investment adviser, prior to execution. None of the information contained herein constitutes a recommendation that any particular security, portfolio, transaction, or investment strategy is suitable for any specific person. Option trading and investing involves risk and is not suitable for all investors.
All opinions are based upon information and systems considered reliable, but we do not warrant the completeness or accuracy, and such information should not be relied upon as such. We are under no obligation to update or correct any information herein. All statements and opinions are subject to change without notice.
Past performance is not indicative of future results. We do not, will not and cannot guarantee any specific outcome or profit. All traders and investors must be aware of the real risk of loss in following any strategy or investment discussed herein.
Owners, employees, directors, shareholders, officers, agents or representatives of ORATS may have interests or positions in securities of any company profiled herein. Specifically, such individuals or entities may buy or sell positions, and may or may not follow the information provided herein. Some or all of the positions may have been acquired prior to the publication of such information, and such positions may increase or decrease at any time. Any opinions expressed and/or information are statements of judgment as of the date of publication only.
Day trading, short term trading, options trading, and futures trading are extremely risky undertakings. They generally are not appropriate for someone with limited capital, little or no trading experience, and/ or a low tolerance for risk. Never execute a trade unless you can afford to and are prepared to lose your entire investment. In addition, certain trades may result in a loss greater than your entire investment. Always perform your own due diligence and, as appropriate, make informed decisions with the help of a licensed financial professional.
Commissions, fees and other costs associated with investing or trading may vary from broker to broker. All investors and traders are advised to speak with their stock broker or investment adviser about these costs. Be aware that certain trades that may be profitable for some may not be profitable for others, after taking into account these costs. In certain markets, investors and traders may not always be able to buy or sell a position at the price discussed, and consequently not be able to take advantage of certain trades discussed herein.
Be sure to read the OCCs Characteristics and Risks of Standardized Options to learn more about options trading.
Related Posts
