STOP Gambling on MU Earnings – Do This Instead

0:00I want you to stop gambling on micron earnings and every other stocks earnings and I want you to do this instead, right? What we're going to talk about today applies to not just micron, but to every stock at any time. So let's take a look at it. Micron at the time of this recording is running up into earnings. Now this is one of my number one all-time favorite trades is exactly what's happening right here, which is the pre-earnings run. We're going to talk about that more in just a minute, but this is where retail is fomowing into the stock. Now you as a professional investor, you watching this right now, you should call yourself a professional investor. You're looking at the situation saying, dude, I would love to take advantage of you. Yes, thank you very much. I would gladly ride that rip hashtag right the rip. But let's see. Every stock is required to disclose their earnings and they can move and price can move violently whenever they do. Now, I'm sure there's some sort of exception, right? But I would say 99% of the time every stock is required to disclose their earnings. Why? Because investors are company owners.

1:01I know we get kind of lost in the sauce on the game of trading, but investors are company owners. And if you were the owner of a company, wouldn't you want to know how your company was doing over the last quarter? Now the reason that prices move quite a bit post earnings is because it resets things right. It it causes people to reevaluate their fear and their greed on a stock. Now you can have absolutely killer earnings reports and the stock can drop. You can have the worst earnings reports ever seen and the stock can rock it up higher. They are always going to do something, right? But you don't always have to be part of it. Now what we're going to talk about today is reducing your risk in those trades because investors want to take advantage of these moves. So they can be the hero, right? How many times have you bought a stock right up into earnings because you wanted to make that quick money? You wanted to be the hero.

2:01You wanted to be the guy. In fact, I know that it was a while back. It was a while back Facebook, gaped up 25% post earnings. Allent here, gaped up 30 something percent post earnings not too long ago. In fact, let's go to a couple charts here. Let's go to. Let's go to counter. Right post earnings boom. Rockets higher. In fact, this will be a great example here in just a couple of minutes and we turn off my notes. This will be a great example here in a couple of minutes. Everybody wants to be on this right. Everybody wants to be part of this right. If you want to be part of a big beautiful post earnings move. Put a thumbs up in the chat. And especially hit that thumbs up button like and hike because we all want to do that. But there is considerable risk. This is what I call catalyst risk. I remember it cuts both ways. Now because it cuts both ways, right? Here's an example of a palantir going going and gone.

3:03And then we can look at an example in Netflix, which before we get into that example, don't you think that Netflix is going to go up after earnings? Of course, she would think Netflix is going to go up after earnings. Let's just see how. Oh, in fact, if we go back to April, it ran up into earnings again. One of my number one all time favorite trade setups. It gaped down on earnings and went down the entire quarter after that point. Then it had earnings and gaped down again. This is why I call it catalyst risk. Now I did a little bit of research and I wanted to pull this up. This is the Google AI. The average 30 day return over 31,000 corporate earnings reports actually showed a historical performance of nothing, a historical performance of nothing. There is no edge according to this to be gained. Which kind of blew my mind. No edge to be gained by trading earnings.

4:07On average, the positive and negative gaps, cancel each other out. But there is considerable risk. In this case, 7% risk in that same three day timeframe. Now 7% doesn't feel like a lot here, right? Looking at it in looking at it in absolute terms. But tell me. If you got into the stock and it went down 7% are you going to be like, oh, it's no big deal. Oh, Netflix, I mean, it went down. You just had to go down a while. It went down, you know, that much. No, that is totally no big deal. No, of course not. Of course not. That's the risk that you're talking about whenever you put on these trades. I don't want you to have that kind of risk. I'm not sure you had to avoid that just a minute. Remember that risk cuts both ways while you want to be the hero. I mean, statistically speaking, you're going to end up at nothing. Give it enough occurrences. Now retail traders love to pile in at the last moment and like I say, this is my number one favorite number one favorite trading setup.

5:14Right here in Netflix, they did exactly that. And let's go back to micron because that was a subject of today. Right. They did exactly that and micron in June. What happened in June and micron? Let peaked after earnings. I don't know if you can believe this micron actually went down. We'd have about 41% peak to trough. 41% Geez, I don't want that to happen to you. And now we're seeing another run up into earnings right now. What do you think is going to happen? In fact, tell me in the chat, what do you think is going to happen with micron earnings right here? I'm trying to illustrate a point. So if you're watching this sometime in the future, don't tune out just yet. What do you think is going to happen to micron right here? Put in the chat. I want to hear from you. Because retail traders are piling in right now at this last moment. What are you going to happen? Well, we can look at all kinds of things, right? We can look at the outlier data. Right to show that bullish momentum signal and then the bearish momentum signal up here.

6:14Right, it had some huge. Right. I think this was like over 120% during this time from over here. And we got another bullish momentum signal going on right now. Marx is they're going to post either good or bad earnings. No excuse says it's going to tank. Wolf does says it's going to go lower. Who vamp says it's got to go up? Dan says, which thing? It's been a minute 100% to the moon. Bucks through says here comes the monkey hammer. Right. The point that I'm trying to illustrate is we don't have any idea. Paul's got exactly right. We don't know what's going to happen. But the option prices here are going to tell you the option prices you're going to tell you. Something. Let's go look at the option prices here. So what we're going to look at this is micron. And this is the expiration closest to. Closest to the earnings state. Not years out in the future. Not weeks out in the future. The one right closest to it. The way that you can.

7:16You can get an idea of what the market makers think is going to happen is actually pretty simple. Actually pretty simple. Go click the ask button. On the at the money. And the on the calls and the ask button on the at the money puts when you do that that's going to price out what's called a. Nicky Glazer this stunning tour. The thoughts of death. I don't like to dwell on them for longer than like 10 or 15 hours a day. So. November 19th. Yama about theater. No wonder women rush to have kids. We're being trained for it since we were kids. They're like, here's a baby doll. Here's an easy bake oven. I got one of those. I stuck my head in it. I was like, I want out of this narrative tickets on sale now at Yama about theater dot com. Don't miss Nicky Glazer. Yama about theater. This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome that's new. It can help you with practically anything on the web like restoring a vintage motorcycle from a 50 page restoration block or finally break down that long article.

8:19You've had open for weeks. Gemini and Chrome is here for it ready to make anything online makes sense. There's no place like Chrome check responses set up require compatibility and availability varies 18 plus. Hey Spotify listeners. When you travel with American Airlines, you'll enjoy comfort and convenience at every altitude before take off unwind in the admiral's club lounge with curated self serve offerings of hearty bites and refreshments. In flight stay connected with high speed Wi-Fi sponsored by AT&T. Your journey is designed to feel easy from the moment you check into the moment you arrive, no matter where you're going, American get you there book now at AA dot com. A straddle. So let's just do the math here. So 41 55 right here plus 40 15. Now that means at the money, there is an 81 dollar range, but market makers understand that stocks generally don't move as much as they think it is. So if you use it up a little bit, so what you do is you take 15% off.

9:20So multiply by 0.85. If you a $69 range, that is the expected move for micron. That is $69 either way. Now I know some of your lick in your chop saying, oh my gosh, I would love to go up $69 on micron. I would be so smart. I would be such a genius. And the other half here saying, oh man, I'm not risking $69 to find out if it's going to work for me. No, thank you. No man, no sir. And that's what the option prices are telling you. It's $69 either way. $69 either way, which is about a 6.5% give or take move one direction or the other. That's interesting. I'll line up with what we're talking about here. The rain. Oh, wow. Who would have thought the range of roughly 7% is roughly exactly what we're talking about here. Huh. Now, given the fact that we don't know what the future will be. Even though we have all the best data at our fingertips, even though we don't know what the future is going to be. Go back to the PowerPoint over here. Close earnings volatility crush will destroy your options.

10:23It will absolutely destroy your options. So if you are trying to take advantage of this and you're like, I'm going to go by calls. I'm going to go by puts. Well, you know what? I'll buy a call and a put that way. That way, it doesn't matter if it goes either direction. I'm still going to make money. Close earnings volatility crush is real. I have tried to trade it and I have lost a Vuku bucks as nanny you would say. Close earnings volatility crush, right? You just bought it for $81 combined. Close earnings volatility crush. Happens because we know what's going to happen, right? Instead of being $40 on either side, it might be $15 for example, just for example, sake. It might be $15 within an hour of the price opening after earnings. And it may not have moved a single dollar either direction. And your option prices just fell by more than 50% each. Actually, let's let's do the math on this. How much money would you lose if it went from $69 down to 30. So that's a 48 divided by 69.

11:23You lost 57% of your investment overnight just from the volatility crush. I definitely don't want that to happen here. So I'm doing here. I'm stacking all these things. I don't want you to have all these headaches in your future. So what can you do instead? Look where the gap and go. If you know what I'm talking about, put hashtag ride the rip in the chat hashtag ride the rip. Because the gap and go is one of the greatest trading instances. The greatest trading patterns I've ever come across. I'm going to teach you that step by step. I step here in two seconds once I find the slide. It's a red slide. I know it's a looking for hang on right here. No, it's not. It's right here gap and go. When I stock gaps up. No, it's important. We have to have the gap to start with when it's stock gaps up and then doesn't turn around. This is 18 T. We can look at Palantir. We just had that up a moment ago.

12:24Right. This is a gap up and go. In fact, I even marked on the bottom of that. A gap up is the difference between the close price of day one and the open price of day two. If that's generally 5% or more, which is my rule, right, 5% or more up, we have defined the gap between day one, which is the prior. And day two is the gap candles open price day two is the gap candle. This is a five day pattern at max, but it starts from two to five days. Draw a low on the line of day two. So let's go back to micron. And let's go to their previous earnings report. And we're going to draw low at the bottom of the gap candle from their earnings report. Oh, that doesn't look so good. No, it doesn't. It doesn't at all. If it closes below that line, if it closes below the low of the gap line, consider a gap in crap.

13:24Exactly precisely 100% what happened with micron. That is a gap in crap. Let's go back to Palantir. Draw line, you can see I actually did this. I actually traded this when we're doing some forward testing not too long ago. Draw line on the bottom of the gap candle here. And if it doesn't close below that point, you could be looking. Let me just remove all my drawings here. You could be looking at what's called a gap and go where it's just rocketed higher and higher and higher. So rather than putting your money at risk when we don't know what the outcome will be. You could, I'm not going to tell you what to do, whatever you want to do, you could. Take a step back, take a day off and say, OK, I want to see what happens next. Will it gap up? That's a great start. Draw a line on the bottom of that gap candle and I'll do it right here. Draw a line on the bottom of that gap candle. If price doesn't go below that point, hey, you know what, you could be looking at a new gap and go situation.

14:28If price does, let's go back to my crime. If price does close, close below that point, consider it a big giant warning you need to get out of the way. Does this make sense? Does this make sense? Sally said it made sense. That's why she got a tattoo. I love it. So here's what I want you to do. Always remember, you don't have to trade into earnings. You never have to trade into earnings. You can step out of the way and you can say, it's not worth my money. It's not worth my portfolio being at risk to find out if the straight is going to work. Let the gap happen. Let the earnings happen. Let it do what it's going to do. And then after that gap has happened, you can jump in. You can say, let's either go to the moon. Or if it's going to turn around, I'll know right away. Now, if you click this video right here, you're also going to learn right away. Five hidden market forces that are secretly working against your trade that you don't even know is happening. Click this to learn what those hidden market forces are.

15:29Be sure you subscribe and we'll talk soon.