Tuesday, September 22, 2015

Tuesday's Agenda

I'm looking at two prospects for trading today, each of them having broken beyond their 20-day price channels on Monday.

FB, with a low odds bull signal, is showing implied volatility this morning in the 66th percentile on its one-year range. However, it publishes earnings on Oct. 28.

Typically, volatility rises in the month prior to earnings, and then collapses after the announcement. That's the basis of the earnings plays that form such a large part of my trading.

Entering FB now makes it likely that my position would face higher volatility as it nears expiration, the opposite of what I am looking for. So I'll not do an analysis of FB today and shall defer consideration of the symbol until just before earnings.

With earnings season beginning Oct. 8, this sort of situation will be increasingly frequent over the next few weeks.

EWZ, with a high odds bear signal, is in the 57th percentile of its one-year range. The high odds make it a candidate for a directional trade, such a bear call spread.

I shall do further analysis of EWZ as a potential trade today.

-- Tim Bovee, Portland, Oregon, Sept. 22, 2015


My volatility trading rules can be read here.


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Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.
No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

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