Of 480 large-cap stocks and exchange-traded funds in my analytical universe, 33 broke beyond their 20-day price channels, 27 to the upside and six to the downside.
One symbol giving a trading signal having low odds of success survived initial screening, having broken out to the upside.Low-odds symbols are candidates for non-directional trades and time spreads.
There are four prospects for trades coinciding with earnings announcements.
I shall do further analysis on Wednesday, April 20.
Earnings season began April 11. The higher pace of announcements will continue for about four weeks from that date.
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Trading signal survivors
High-odds Bull
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High-odds Bear
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Low-odds Bull
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Low-odds Bear
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MON has implied volatility below the minimum acceptable level of the 60th percentile or greater of the most recent range. If the decline reverses sufficiently on Wednesday, then I shall post a full analysis. Otherwise, I shall reject the trade without further analysis.
The dates are those of the events, all of them earns announcements. Events prior to the opening bell are marked "am", during the trading day "mid", and after the closing bell "pm".
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All four prospective earnings plays saw implied volatility declines on Tuesday, leaving them below my minimum acceptable level. I'll post full analyses only for those that improve to the 60th percentile or greater.
Methodology
The stocks in my analytical universe all have analyst coverage through the stock-ranking company Zacks Investment Research. Not all of the exchange-traded funds are so covered.
I screen the symbols for historical odds of a profitable signal in the direction of the breakout for the past 12 months.
For symbols whose odds of success are in the top or bottom thirds, suggesting a directional or non-directional trade, respectively, I next screen for 1) suitability of the options grid, including open interest of three figures or greater on the strike prices I would need to use to build a position, 2) implied volatility in the 60th percentile or greater of its 12-month range, and 3) the absence of an earnings announcement within the lifespan of the like options series I would trade.
-- Tim Bovee, Portland, Oregon, April 19, 2016
References
Tradecraft: Playing the odds to build winning stock market trades from options, a description of how I trade, can be read here.
Alerts
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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.License
All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Based on a work at www.timbovee.com.Tss s ss'ss
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