Tuesday, February 2, 2016

Tuesday's Agenda

I have seven prospects before me this morning, all potential trades coinciding with earnings announcements. They are CMCSA, GILD, MDLZ, MPC, MRK, NOV and YHOO.

Two are oil companies -- MPC and NOV -- which I'm avoiding at present. I'm removing two pharmaceutical houses from the list, GILD and MRK. Both sectors are extraordinarily prone to externalities, things that the markets can anticipate only obscurely.

That leaves three: YHOO, CMCSA and MDLZ. My first test this morning was to look at implied volatility as a percentile of the most recent range. My standard is that volatility be in the 66th percentile or higher.

CMCSA unequivocally fails with IV in the 50th percentile. I am rejecting the trade without further analysis.

MDLZ also fails, with IV in the 65th percentile. However, MDLZ is within reach of passing the test, and I shall check it again later in the day. If volatility has moved to the 66th percentile or higher, then I shall do the analysis.

So, at this point, I shall do a full analysis on YHOO, and perhaps one on MDLZ as well, contingent upon the IV percentile.
-- Tim Bovee, Portland, Oregon, Feb. 2, 2016


Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, 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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