Suggestions At The Best Way To Play The Market Through Earnings Season

ALCOA (AA), is actually the bell weather sign that gains are upon us again. AA is the first major component of the DOW to report and it's the unofficial signal that the earnings cycle has started. The fact is that earnings never stop.

Even though the numbers may dwindle to a trickle at times, you'll find companies reporting constantly. But now we will see a swell of daily reporting that builds to as many as 3-400 per day within the next two weeks.

Then it will peak and drop off again sharply. Not all exciting companies report during this period. In general, most of the companies you know will report over the next 3 weeks.

The reporting excitement has an overall effect on the market. While businesses can benefit from reporting great info while everyone is watching, the earnings cycle can also work against them if they get caught up in a list of 300 companies reporting on that day.

Also a couple high profile companies can influence the market for a day or two. Others will be swept along with the momentum no matter what their earnings were. It's tough to report good news on a bad day.

So, some ideas on how to play the market throughout the earnings season:

First - find out what day your company is going to report.. The very best method to verify is to call the company investor relations department.

Second - Time of day is really important to traders. The young man would not tell me what time of the day the data would be released. This is quite common for a business to have a standing policy for their release time, but it is not guaranteed

Third - Play or No Play. If you do not have practical knowledge playing earnings you must do some learning and practicing. You can find specific earnings plays that may work well. Guessing isn't a great one.

Fourth - History. The history of the stock can be very valuable.

Fifth - Option Pricing. The price of options can be a great tip off. High volatility can produce huge time premium which frequently gets reduced dramatically as soon as the earnings come out.

Sixth - Time of the month. It may be fine to enter a trade by buying a Call or Put even if there is only a week left until expiration if you will only be in it for a few days.

Seventh - Techniques. The riskiest and most profitable earnings play may be the one sided Long Call or Put. Again, it is a crap shoot and must be played with Very disposable cash. Most typically some sort of combination play such as a Strangle or Straddle is utilized.

So, please have fun during earnings season, but be cautious. Know where your skill level is before you put money into trades. Do not be afraid to play earnings. You will not learn as very much or as fast on the sidelines and you do not have to put very much money in the trades to practice in real time.

You must practice perfectly and that means get trained properly. The most valuable advice could be obtained from an experienced investment consultant. To locate the most reliable investment expert search: [shell company], public mergers, or merger companies. Don't forget, practice makes perfect!

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