You’re Probably Trading Earnings the Wrong Way

Earnings are one of the biggest movers the market sees every quarter. And when a stock is moving, you want to trade it. But almost everyone trades earnings the wrong way. You don’t want to trade through a report… you want to trade before it – and after it. That’s exactly what Mark Sebastian is doing this fourth-quarter reporting season. Get the details of his strategy here.

Trading Apple After Good Earnings

  1. Apple Inc. (Nasdaq:AAPL)

Earnings are officially out on the mega-cap tech stock, and they were good. The stock is rallying…

Implied volatility is crashing – making options cheap

AAPL Earnings

And option volume expiring today is exploding.

I think there’s opportunity here to set up an interesting long call play for February 4 – and that’s exactly what I’m going to look at in today’s Profit Revolution trading session.

If you want to finish the trading week with an asymmetric post-report play on Apple, then this is where you need to be.

  1. CSX Corp. (Nasdaq:CSX)

CSX is AAPL’s opposite today – earnings are out, and the stock is sinking. But this is actually a bullish opportunity. I still love rail, and this is a good opportunity to buy the dip and go long.

  1. US Steel Corp. (NYSE:X)

After a blood bath of a week, X is having a strong day. It’s probably time to get long here … and I might look at the $20 calls in X to do just that.

Inflation’s Safe Haven: Mining

Freeport-McMoRan Inc. (NYSE:FCX) is one mining company that just saw a massive bull calendar spread:

This big-money customer bought 10,000 of the FCX March 18 $42 calls and sold 10,000 of the February 18 $42 calls against it, creating a bull calendar spread for a net debit of $610,000.

Essentially, they’re betting on FCX getting to $42 by February expiration and then potentially moving higher from there.

I think there’s huge upside in mining and commodities right now, especially as inflation continues to grow.

The FCX February $36 calls are only $1.80 for a cheap way to piggyback this bullish bet on mining – and you could see an asymmetric return by mid-February!

This Is Where Rallies Are Born

Green Traffic LightThe market may be experiencing volatility exhaustion.

Over the last few days, we’ve seen the range of the S&P fall. From 200 points in a day, to 150, to around 75.

We could be coiling here, setting up for a short-covering rally and a dip in the VIX.

Right now, the VIX sits at 30. But the market needs to move about 2% a day to justify that level, and it’s starting not to do that.

And while my VIX light is still green, this is where rallies are born.

Have a great weekend,

Mark Sebastian
Founder, Profit Takeover


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