What’s happening: It’s a huge week for earnings announcements, with more than 20 percent of the Standard & Poor’s 500 scheduled to release results.
The impact: Earnings – especially on large-cap, brand-name stocks – can and will move markets in extended-hours trading. Let’s say a big tech company is set to report earrings and you holding stock options — either calls or puts — on a different big tech stock; you could make or lose a ton of money simply due to how the one company’s announcement moves the tech sector. It has nothing to do with your stock, and everything to do with the news cycle.
The play: Get a good night’s sleep; don’t bother holding positions overnight right now, knowing that the tide is shifting so quickly during earnings season.
This is a lesson I have learned the hard way. Holding through earnings season with a small account simply isn’t wise; protect your hard-earned money and don’t let the whims of the news flow hurt you.
Davis Martin is the head trader at Dailyprofitmachine.com. He trades SPY calls and puts and swing trades individual stocks and stock options. At the time this article was published on RagingBull.com, he had no shares, options or open orders in the stocks mentioned here.