Introduction: I have been trading stocks for over 40 years. And yet mistakes are often made despite the years of experience. Just when one thinks things are going fine, something happens that humbles the trader. It is with this background that I relate a recent trading experience as a lesson we can all learn from. Background of the trade: Earlier in the year the stock Red Hat, Inc. (RHT) was traded for a 28% profit (as shown on the Fusion Track record at RadioActiveTrading.com). But after a market sell off it looked like a market opportunity to re-enter the position. RHT was purchased on 3/28/2018 for $145. A put option was also purchased following the rules in The Blueprint to create a Married Put for safety. RHT rose soon after the purchase into the 150’s and then shot up to the 160’s. The put was sold as it still had…
Tag: earnings
Earnings Growth Creates Stock Growth
Earnings are an important indicator of stock price appreciation. In general, if you expect to earn 10% on your stock investments, the stock you choose should have their earning grow at 10% or more. Certainly there are exceptions. Buying a stock because of some short term news event, a new technology that is being developed, or a rumored merger are all exceptions. But over the long run, you should select companies for stock purchase that have a steady earnings growth so they will tend to rise in stock price in line with that earnings expectation. When company selections are made for long stocks or married puts, we generally screen for companies that have good earnings growth. On the PowerOptions site the parameter we like to display and search by for earning growth is %EPSG. %EPSG is and abbreviation for % Earnings Per Share Growth. If %EPSG is not displayed in your search results, add that…
SIV – Stock Implied Volatility and Stock Earnings
Q: What is the SIV data and search parameter that PowerOptions provides? A: As you know, historical stock volatility can be measured in many ways: 20-day volatility, 50-day volatility, 100-day volatility, etc. Rather than use the historical trading range of the stock to measure volatility, investors will use the SIV.