Weekly Earnings Commentary
As we move into the last few weeks leading up to the next earnings season, it should be no surprise that there is little in the way of earnings announcements this week, or next week for that matter.
Earnings season “officially” begins in just over two weeks. On April 12, several of the big banks (WFC, JPM, C) are due to kick things off. As always, we will look to take on a few trades around that time. Until then, we patiently wait, sitting on our hands, for the earnings calendar to provide us with ample opportunities.
The portfolio now stands at an all-time high of 97.6% in total returns.
Remember, even though these are short-term trades, this is a long-term strategy – a strategy based on the law of large numbers and statistical probabilities.
ALWAYS remember that risk management is key. If one trade stresses you out your position size is way too large. Pare it back. Position size is the only true way to manage risk using this approach. Yes, in almost every case, we will be able to get out for far less than a max loss, but stop-losses are only secondary to position size when managing risk. So please don’t overlook the importance of choosing an appropriate level of position size. Every investor will have a different level of risk tolerance, but without understanding your own risk-reward per trade, you are surely destined to create unnecessary challenges. Make it easy on yourself.
We’ve made 43 trades in total with a win ratio of 79.1% (34 out of 43 winning trades).
If you have any questions, please do not hesitate to email me at andy@cabotwealth.com.
Weekly Watchlist
There are no potential trades this week.
Top Earnings Options Plays
Here are a few top earnings options plays for this week (3/25-3/29) if you are so inclined:
Images Courtesy of Slope of Hope
Trade Ideas for This Week
As a reminder, you will quickly begin to notice I tend to stick with stocks that have high liquidity as it’s far easier to get in and out of a trade. Medium liquidity offers tradable options, but sometimes the bid-ask spread is wider, which means a greater potential for more price adjustments, making entering and exiting a trade difficult from time to time. Remember, there are roughly 3,200 tradable stocks with options and 11% have medium liquidity while only 3% have what’s considered high liquidity.
Potential Trade Ideas for This Week (Not Official Trade Alerts)
No potential trades this week.
As always, if you have any questions, please do not hesitate to email me at andy@cabotwealth.com.
The next Cabot Options Institute – Earnings Trader issue will be
published on April 1, 2024.
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