It’s the most wonderful time of the year… and it also happens four times a year.
Get ready, folks — Q1 2022 earnings season is on deck!
Now, there’s no exact science to trading into earnings season, but if you ask any market pro what they think about the idea, they will tell you when it’s done right, it can be a great way to score fast profits.
Generally speaking, when a big-name company is set to report and expectations for an earnings beat are high, we see a strong run-up in share value…
Which means four times a year, you have a serious chance at scoring big money on short-term trades.
The catalyst for these opportunities is the fact that earnings reports very often cause the largest moves in stocks in a given trading year. A better-than-expected quarterly report can send a stock’s price soaring. Conversely, a less-than-impressive announcement can send shares tumbling. We can use this action to produce huge gains in just a few days or weeks.
Let me show you how with a recent example.
How We Locked in 295% Trading Into Starbucks’ Q3 Earnings Report
Back in June, I was on the hunt for a hot options trade that I would be confident would pop leading into earnings.
Scanning the Q3 earnings calendar at the time, I identified a list of companies that were reporting soon. Then I began trimming this down to the companies I expected to have the highest trading volume leading into earnings season.
Starbucks (NASDAQ: SBUX) came in at the top of my list. The company announced it would release its third-quarter fiscal-year 2021 financial results after the market closed on Tuesday, July 27, 2021. Many experts, including myself, expected a strong earning beat.
Starbucks’ business essentially collapsed in 2020 due to the pandemic, but it rebounded strongly in early 2021. It was a “Great Reopening” stock. Moreover, in its Q2 2021 earnings report, the company issued guidance for full-year fiscal 2021 with EPS in the range of $2.90–$3.00 versus $2.84 consensus analyst estimates. Moreover, CEO Kevin Johnson stated full-year 2021 revenues would come in between $28.5 billion and $29.3 billion versus $28.53 consensus analyst estimates.
On top of that, we had a number of other fundamental catalysts:
- The price of arabica coffee beans were at their highest levels since 2016.
- SBUX’s international growth was surging, especially in China’s coveted market.
- SBUX stock had recently started consolidating in a tight range.
With all this in mind, my expectations that SBUX would beat Wall Street estimates also meant I expected a nice run-up in SBUX share value leading into earnings.
On July 16, 2021, I wrote to my readers to initiate a “buy to open” order on one or more of the Starbucks July 2021 $123 call(s) that expired July 30, 2021.
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At the time of that alert, each option contract was priced at $0.86 per share, or $86 in total per contract.
Once we were in the trade, our goal was to sell the contract(s) as we approached the expiration date. Because our bull case for this trade was rock solid, we ended up closing out this trade in just one week for $3.30 per share, or $330 per contract — a 295% gain!
And this wasn’t blind luck.
Over the course of 2021, we locked in numerous double- and triple-digit wins, with an average gain of 138%, all using my proprietary trading system. And 2022 is starting off with a bang as well. My followers and I already cashed in for 51% on Walmart Inc. (NYSE: WMT) and have two open trades currently up over 100% each!
And we’re only using a few hundred dollars at most to enter these trades.
That’s why I find it shocking that so many investors are still sitting on the sidelines, unsure if options trading is right for them. Unjustified fears of unlimited risks, the speed of these trades, and the unfamiliar terminology associated with options trading still seem to be major deterrents for many people who could be making a lot of money trading options.
The good news is…
If you want to trade options but are still unsure how to do it (and do it successfully), you’re in luck. I’m currently working on a brand-new, velvet rope service, set to launch in the coming weeks, that will not only give you my best trades and strategies but also teach you how to use the strategies to make your own trades in time.
If you’re looking for the easiest way to score huge gains in the market with only a few hundred dollars to get started and in just a few weeks’ time, you’re in the right place.
More on this soon. Have a great weekend.
To your wealth,
Sean McCloskey
Editor, Energy and Capital
@TheRL_McCloskey on TwitterAfter spending 10 years in the consumer tech reporting and educational publishing industries, Sean has since redevoted himself to one of his original passions: identifying and cashing in on the most lucrative opportunities the market has to offer. As the former managing editor of multiple investment newsletters, he's covered virtually every sector of the market, ranging from energy and tech to gold and cannabis. Over the years, Sean has offered his followers the chance to score numerous triple-digit gains, and today he continues his mission to deliver followers the best chance to score big wins on Wall Street and beyond as an editor for Energy and Capital.
