Waiting is sooooo BORING, isn’t it? Whether you are waiting in line at the bank, at an amusement park or stuck in traffic. It’s the biggest waste of time. What goes through our minds? ‘Get me there fast, I don’t want anymore delays’. But the more we push the less chance to really enjoy an experience. Oh, I know what you’re saying – waiting is not enjoyment. However, this crowded world of ours sometimes requires some patience prior to our enjoyment or satisfaction. Now you must be asking yourself, how does this relate to trading or investing? I’ll tell you it has everything to do with the success of trading, and many have failed miserably by not stepping back and being patient. Is that you, and if so…can you change your ways if it led to success?
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This current earnings season is a great example of why it is good to wait. As for jumping on trades, it has been mostly about waiting for the reaction. This is not true in most cases – Apple being a great example of why it is not good to wait. But frankly the big money was made with Apple in the weeks leading up to to their earnings. So far the Q2 earnings have mostly been a mixed bag. But some have benefited by waiting for the result. IBM started out up a couple buck and ended higher by nearly 10 that same day. A few names have been beaten to a pulp – let’s not talk about Riverbed, Caterpillar or F5 Networks. But some of the financials have come back up – again, after a delayed reaction.
Let’s talk Google here. Last week I put up an article about how to trade Google in front of earnings. It was a difficult chart to play – could have gone either way. Much different than last October when we played it prior and told as many about it as we could, and crushed it. No, this time I had a different plan, which was to wait and see the action after earnings, check the technicals and chart patterns then make an assessment. This past week confirmed the uptrend even after the big earnings run. My plan was to play it post-earnings. That’s right, after a big 60 point move! And that’s what we did, buying the 600/625 call spread for 9.9 in Explosive Options. This trade is working nicely (up about 50% through Friday). But you may ask why not risk an play earnings? I made the choice that my play would be after earnings – if at all. That was my move to be a bit less riskier this time around. Does it matter? To me it makes all the difference in the world. Sometimes I’m wanting to lay out risk, other times I choose not to do it. So, we passed on a risky earnings play only to get involved in a more ‘highly predictable’ situation. I like the tradeoff.
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