An Earnings Season Options Strategy That Actually Works

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No time of year gets me more excited to trade than earnings season.

Four times a year, U.S. companies pull back the curtain on their revenues, expenses, challenges, advances and innovations.

This creates a whirlwind of news that makes stock prices swing wildly… And these swings can offer trade opportunities with life-changing potential.

The next earnings season is nearly upon us. But there’s a problem…

When trying to trade a stock around earnings, almost everyone gets caught up on the event itself. They try to time the single-day pops and drops that follow each earnings report.

Or worse, they try to predict how the earnings report will go by placing directional bets ahead of the event.

More often than not, these trades end in heartbreak. Because even if a company releases great earnings, the stock might fall in response. Or vice versa.

Trying to predict how earnings will go is tough on its own. Accounting for how Wall Street will respond … and you’re basically spinning the roulette wheel.

But there’s a far better way to go about this. And today I’m going to show you how to reap triple-digit gains throughout earnings season, without ever gambling on the actual event.

It’s this same method that’s led my Quick Hit Profits subscribers to 62 trade opportunities that doubled their money — at minimum. Often it was much more.

A handful of times, this strategy produced winners that would’ve quintupled your money and then some.

So get a pen and paper ready. You’ll want this strategy close by once earnings season kicks off…

Do 1 Thing Different This Earnings Season … and Capture 100% Gains

To demonstrate, let’s recap a recent triple-digit gain my subscribers had on computer giant HP Inc. (NYSE: HPQ)

On February 25, HP reported fourth-quarter earnings that crushed expectations. Shares jumped as much as 7% the next day, more than enough to reward anyone who was betting on a quick surge.

Here’s the thing, though…

I didn’t participate in this 7% pop. In my years as a trader, I’ve learned these moves are too unpredictable. Trying to capture them isn’t much better than gambling.

Instead, I focus on the price action that develops after an earnings event.

Because even without the 7% pop, you can still bag a triple-digit gain in a matter of months when you trade options.

Before I go on, look at this chart of HPQ from its last earnings report.

An Earnings Seasons Strategy That Actually Works

(Click here to view larger image.)

Looking at this, you might find it difficult to imagine the stock going higher. Including the 7% earnings pop, it was up 70% in four months.

You might even point to the 76 reading on its Relative Strength Index (RSI), and tell me it’s overbought. It looks like a time to be selling the stock — not buying it.

But I knew, based on historical performance for the stock, that shares were set to continue rallying despite the 7% post-earnings jump.

How did I know?

My Profit Trigger system.

This system focuses on stocks that have proven to continue rallying after a post-earnings spike. Out of the thousands of stocks that report earnings each season, I found that just 75 of them produce consistent patterns.

When these stocks make a big move on earnings after topping or missing estimates, I have a Profit Trigger that tells me exactly what to do.

And when a stock hits my Profit Trigger, I know we have the opportunity for gains of at least 100% in the months that follow.

HPQ is one of these stocks. That’s why I told my readers to buy call options on HPQ after earnings. Nothing fancy. Just at-the-money calls that expired in about three months.

And look what happened…

An Earnings Seasons Strategy That Actually Works

(Click here to view larger image.)

Over the next few months, HPQ steadily climbed another 25%. And our call options rose 100%.

All I needed to see was the company beat earnings expectations by more than 5% and for the stock to pop at least 5% on the news.

We didn’t have to gamble on how Wall Street would react to HPQ’s earnings, like most traders tend to do.

Instead, we let the event spark a chain reaction that caused the stock to rally over the following months.

This has happened to HPQ eight times since 2006, where the stock beats expectations and jumps on the news.

And every single time, HPQ climbed over the next couple months.

HP is set to report earnings in late August. So if it hits these parameters, you know what to do…

What’s most exciting to me, though, is that HPQ is just one of countless opportunities we’re looking at over the next couple months. All 75 of the stocks my Profit Trigger system tracks are reporting earnings this season.

And all of them carry this same dynamic.

That’s 75 opportunities to double your money (at least) in the next few months.

If this is your first earnings season, this might be intimidating. But I won’t leave you in the dark.

Over the next few weeks, I’ll share a few more earnings opportunities with you.

But more importantly, you’ll learn the smart way to trade earnings reports … and likely make some good money along the way.

Regards,

Chad Shoop, CMT
Editor, Quick Hit Profits

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