If you ever visited The Octagon – our live trading room where I and Jason Bond trade – you’d know we both think stock catalysts are very important. 

Ben Sturgill holds very similar views, as those of you frequenting The Workshop – Ben’s own live trading room – can attest to. 

The significance of catalysts is very simple – they bring in new information, forcing the market to re-evaluate an underlying stock. 

Whether positive or negative, all major catalysts have one thing in common – they bring in volatility and outsized moves and that’s all we, traders, care about.

I know that we generally use catalysts to find active stocks to enter.

But can you anticipate a catalyst beforehand? And use it for an outsized exit?

Ford Joining the EV Hype

Ford Motor Company (F) is not just the iconic car-maker. 

It’s also a stock we, Raging Bull trades, have been talking about for months now. 

Here’s an excerpt from Jason Bond’s watchlist from back in May (!!!):

The stock is now trading above $24 – not too bad of a call on Jason’s end!

We’ve all mentioned F numerous times since for one simple reason – Ford’s EV announcement was simply too massive and the EV sector too strong!

We knew the market would react in some shape or form!

Ben’s Recent F Trade

Speaking of much more recent times, though, Ben noted Ford a few weeks ago, right as it was consolidating at the highs:

The stock clearly wanted higher, but was struggling to gain traction. 

Ben’s general thesis was simple – a fundamentally sound company, with a compelling growth story, a strong uptrend, in a very strong sector and a possibility of future EV announcements/catalysts.

From the technical standpoint though, Ben saw a failed breakout higher after a long consolidation. 

Still, he believed that if support held, the breakout will be retested again in fairly short order. 

So he picked some Call Options on yet another dip below $20, with a very tight stop: 

Fast forward a few weeks, and the technical setup was working just like he had anticipated:

As of yesterday, the stock was going for a re-test of the breakout area and actually climbed past it to nearly $22.

Ben began scaling out of the trade. 

And then today came, and Ford announced that it’s doubling its production goal for the electric version of the F-150 Pick-up truck. Shares soared:

And so Ben took off his remaining Calls:

Bottom Line

Neither I nor Ben or Jason would advise you to trade in anticipation of a catalyst. 

From our experience, these trades generally don’t pay well.

In Ben’s case – he wasn’t anticipating the catalyst. The trade was already great PLUS he knew there was potential for future announcements.

Hence, don’t bet on it, but if you find a stock where the market is clearly supporting a higher valuation, the story is hyped up, and you get a great technical setup in it – an unexpected catalyst may really rush things in your favor! 



RagingBull is the foremost trading education website where traders of all skill and experience levels can learn to trade or to become a better trader. Students can learn from experienced stock and options traders, and be alerted to the real money trades these traders make. Become a better trader with RagingBull.com's courses and programs.

Learn More

Leave your comment

Skip to content