Understand Earnings Reports to Maximize Profits - Investing Shortcuts

Understand Earnings Reports to Maximize Profits

By October 21, 2015Investing, Markets, Trading

The digital information onslaught has investors focusing on short term more than ever. The high frequency trading algorithms are often momentum based programs for part of a penny in a millisecond.

That mindset has spilled over into a “what have you done for me lately” society lacking larger perspective. Immediate gratification and satisfaction has become the new normal as patience has become passe.

Corporate earnings are the quarterly scorecard of performance for publicly traded stocks. The four times a year data has been accused of hampering long term objectives at the expense of today.

Investors ask how to play or around earnings events. Logic would say it is incredibly difficult to trade around the information. A buy and hold strategy would be remiss to exit every ninety days.

The reality is that earnings expectations are often already factored into the price. Analysts have forecast earnings per share and revenue estimates with that information built into the stock price.

The extent that the released data is different than what the street was looking for can cause price movement.

Options can be used on positions much like insurance but the cost has to justify the protection.

Over the last years of financial recovery, a good deal of quarterly performance has seen EPS beat estimates on the whole with bottom line sales lagging in performance.

Earnings come and earnings go, that we all know.

Alan Knuckman

Author Alan Knuckman

Alan Knuckman is the Founder and Chief Market Strategist for www.BullsEyeOption.com a subscription trading service for his inner circle members. He has over 25 years of market experience that began in the pits of the Chicago Board of Trade as a runner and progressed to a Treasury Bond speculator. Each trading day Alan is the video host of the Morning Market Stir from the CME Group and the Pre Market Pulse on CBOEtv. He is also a frequent financial commentator appearing on television regularly with CNBC, CNN, Bloomberg, and Fox Business Network.

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