≈ What’s the proper way to hold a stock investment through earnings? ≈
Though we are generally against holding short-term trades into earnings, the same cannot be said about investments. After all, if you’re going to own a stock for more than three months, then you’re automatically riding through at least one quarterly dance. Here are a few suggestions to help you brave the uncertainty.
First, know your vehicle. We talk loads about using technical analysis and indicators like ATR and PAY ranges to understand a stock’s personality. Use the same logic for studying past earnings gaps to understand the nature of what you’re getting into. Do you own a stodgy old consumer staples stock like Pepsi and Coca-Cola? Or a high flying, freshly minted IPO stock like Airbnb or Door Dash?
Second, position size is paramount. It’s one thing to ride Apple into earnings when it’s 5% of your portfolio. It’s quite another rolling dice into the event when it’s 75% of your account. Placing the lion’s share of your dough into a single position isn’t investing. It’s speculation.
Third, if you’re uncomfortable holding long-term stock positions into earnings, then learn the dynamics of using covered calls and protective puts to control your exposure better.
Chart of the Day
NETFLIX Earnings Gap
Netflix is up +14% in early trading Wednesday after reporting their quarterly earnings which revealed they topped 200 million subscribers for the first time and hinted at potential stock buybacks in the future.
Video of the day
Goldman Sachs Earnings Analysis
Coach Matt analyzes Goldman Sachs Earnings report in this clip from Tuesday’s Halftime Report.
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Originally published at https://tackletrading.com on January 20, 2021.