Earnings, paired trades and other stuff
The future will soon be a thing of the past.
What year did Jesus think it was?
Ever notice that anyone going slower than you is an idiot, but anyone going faster is a maniac?
“One thing leads to another”? Not always. Sometimes one thing leads to the same thing. Ask an addict.
I put a dollar in a change machine. Nothing changed.
No one knows what’s next, but everybody does it.
If the Cincinnati Reds were really the first major league baseball team, who did they play? — George Carlin
A few George Carlin quotes that could have been about trading stocks, no? And some about trading stocks heading into earnings season, no?
Yesterday I talked about how our STX long and our WDC short are truly a “paired trade” in which I’m matching a long in the better-positioned company with a short in the worse-positioned company. Today’s headline here proves why pairing can work to hedge.
Seagate, Western Digital fall after FBN says HDD price declines accelerated
Instead of just seeing our STX calls down on the day, we also get to see our WDC puts up on the day. I’m actually still at a slight loss on these two positions net/net on the day, but that’s a helluva lot better than just seeing my STX calls down.
Anyway, we’re headed into earnings season and the tension is building amongst both the bulls and the bears. And that means we’re likely to have a binary outcome for this market over the next month — it’s likely either going to be up 5%+ from here or down 5%+ from these levels. The ammo on both sides is locked and loaded and whoever loses, the bulls or the bears, are going to lose badly if they’re overexposed.
I’ll wait to see where we are and how we’re trading into the middle of next week when the earnings barrage hits, but I’m sure not looking to be a hero right now. We will see some great trading opportunities come up in the next week or two…but let’s not rush it.
George Carlin Talks About “Stuff”