When you have a solid selection process to help you screen and sort for compelling stocks to trade, it can only help your trading game to know how to move the odds in your favor even more when it comes to having your finger on the pulse of the stock and options markets.
Here are several things I look for:
• Earnings (and earnings announcements), which take place all year long but are concentrated in the middle of January, April, July and October.
• Prevailing trends of the stock or industry
• Industry conferences (like the Consumer Electronics Show, the American Society of Clinical Oncology’s annual conference, Apple’s Macworld, and other events around which new product announcements and demonstrations occur that can impact stocks)
• Unusual trading volume (like the sudden buying of large blocks of options)
• A divergence between what investors are actually doing (i.e., what they’re buying or selling) rather than what they’re feeling and saying (i.e., poll results, analyst ratings)
There are so many things out there that influence the price where an option trades. Becoming familiar with how its shares react in front of events or knowing when a company is releasing new products can really help you to gain a competitive edge over other traders. Knowledge, friends, is power!