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Why Risk Management Is Even More Critical During Earnings Season

by | Jul 22, 2022 | Options

Markets saw three solid days of rallying this week and it’s made for some of the best trading I’ve seen in months!

The positive sentiment has helped New Money Crew strategies rack up wins all week long, starting earnings season off with a bang!

Of course, when markets are riding high, there’s always an opportunity for downside plays like we saw with Verizon earnings during Thursday’s live event…

It all started off with Wiretap Alerts closing out hat trick No. 11 on the year after Vertical Aerospace Ltd (NYSE: EVTL) went through the roof before Friday’s closing bell!

We kept that momentum rolling with our Weekly Blitz Alerts strategy, taking profits on a bevy of names like Snap Inc. (NYSE: SNAP), NortonLifeLock Inc. (Nasdaq: NLOK), Norwegian Cruise Line Holdings Ltd. (NYSE: NCLH), World Wrestling Entertainment Inc. (NYSE: WWE) and Fortinet Inc. (Nasdaq: FTNT).

Both Tuesday’s NCLH and Wednesday’s WWE trades delivered us overnight profits of 46%* and 50%,* respectively — and we finished strong by closing out Friday with another 50%* win in  the second half of cybersecurity stock FTNT!

The latest winning streak lifted the Blitz weighted average return since its debut — including all winners and losers — to 13.5% in an average hold time of 8 days… with an absurd 67.5% win rate over that same time!

All I have to say is if you’re not trading this red-hot earnings order flow, you should be! Because there’s plenty of steak to go around…

Oh, but you want more sizzle? Well, don’t worry — Thursday’s Live Weekly Market Update has you covered there, too!

Snap Steals the Spotlight While Verizon Downside Earnings Play Comes up Clutch

Right in the middle of Thursday’s Live Weekly Market Update, we saw a ridiculous $1.2 million order hit for July 29 expiration Snap calls hit the wire…

Sad to say, Snap fell out of bed after a dismal earnings report. Shares cratered on the news, gapping down 32% at Friday’s open…

While Weekly Blitz Alerts strategy had already taken profits and sized down over the course of the week, I’ll be honest — this one stings, but earnings plays are inherently risky.

There’s still some time left on those calls for a reversal to happen, but we know for sure there’s at least one institutional trader out there who’s sweating bullets right now.

But even with Snap weighing down the markets, there were still opportunities to land outsized gains…

Just as those Snap calls hit, I was busy breaking down some nice put flow into Verizon Communications Inc. (NYSE: VZ) for a downside earnings play during Thursday’s session.

Verizon was dragged down earlier in the week by AT&T Inc. (NYSE: T) earnings after its year-over-year growth failed to impress Wall Street…

Things were looking even worse Friday as Verizon added a paltry 12,000 new phone accounts for the second quarter while rival AT&T gained around 813,000.

The miss saw VZ shares fall 3.5% at the open, sending those July 22, $48 puts soaring!

The options were trading around $0.85 during the webinar before jumping as high as $3.95 — woah, baby, this is why we play earnings!

But You Have to Know Your Risk Tolerance

Moves like Snap and VZ are prime examples of why I can’t emphasize enough how important it is to know your risk tolerance for these high-risk, high-reward earnings bets. 

When we use proper position sizing, we know if the worst happens and those calls go to $0, we’re not down for the count… And when we win, it’s champagne and mimosa time!

Despite the disappointment from Snap, I still see opportunities in beaten-down tech plays… 

But with that in mind, if the big tech stocks can’t deliver on expectations for earnings — we could see another bloodbath hit the tape soon.

Check out the video from Thursday’s market update and watch me break down the play on the Verizon downside earnings flow live in front of our amazing New Money Crew followers!

And if you’re looking for more guidance on trading earnings, be sure check out my Weekly Blitz Alerts strategy!

P.S. Learn How to Trade Like a Wall Street Insider 

Ever wonder why Wall Street always seems to be one step ahead of the average Joe trader? 

It’s because the big firms have a ton of top-secret trading strategies that give them an edge over everyone else!

And while their methods are usually kept under lock and key… I’m pulling back the curtain on Wall Street’s best-kept secret strategy. 

So forget those old buy-and-hold strategies and say goodbye to spending hours reading through pages of reports and squinting at stock charts!

See This Strategy in Action

*Stated results are atypical for given period. Past performance is not indicative of any future results. Trade at your own risk.

WRITTEN BY<br>Lance Ippolito

Lance Ippolito

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