"Microsoft crushed earnings, and I captured a guaranteed winner on the "aftershock." Nate Bear, Lead Technical Tactician, Monument Traders Alliance Earnings season is in full swing, and I've been using my post-earnings "aftershocks" strategy to take winners in Profit Surge Trader. The latest win was on Microsoft (MSFT) in 1 trading day. Here's how it went down… My Aftershocks Strategy at Work If you're familiar with "aftershocks" trades, you know the first step is finding an earnings winner. MSFT crushed earnings on May 1, so it fit the bill. However, I had to be cautious. You see… megacap stocks like MSFT don't usually move much on Day 1 after earnings. But in this particular case, MSFT was actually up nearly double from the expected move. That's rare for a megacap. In my years of trading experience, the bigger move usually comes over the next week. Not on Day 1. So before I made the trade, I wanted to make sure that I wasn't taking too much risk by going out to the following week after a big initial move. The MSFT Trade Setup To exercise caution, I did just one "on-the-money" call on MSFT, with expiration the following the week. The next day – MSFT continued to surge higher. And I scaled out 2/3 of the trade when the contracts were over 100%. So now the trade is a guaranteed winner, and I'm holding 1 contract to see if it goes higher. That's the great thing about Aftershocks trades. Unlike trying to guess what a stock will do before earnings – which is risky - they allow you to capture upward price momentum AFTER earnings for potential gains. |
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