What’s up, traders? I’m really excited this week because it kicks off one of my favorite times as an options seller: EARNINGS! Sure, we had Delta last week as an outlier, but look at this earnings calendar, and you’ll see that the banks lead us off on a busy couple of months.
This is just January!
I know the bears are getting louder. It's starting to make sense that we should have a pullback in the market, but the truth is no one really knows when or by how much.
What I do know is that on Wednesday, JPM, WFC, GS, and BLK kick off one of the most consistent opportunities I’ve had for selling puts.
As companies talk about guidance or report numbers the street wasn’t expecting, it presents us with a great opportunity to sell fear. 87% of the time, from 2016-2021, implied volatility was overstated!
When you combine expected ranges, standard deviations, and some technical analysis like moving averages and weekly support, we take math-based trading and improve the confidence of our trading strategy.
If you haven't already, you should sign up for my mini-course on put selling. It’s totally free, and there won’t be any upsells or gimmicks to get my best information. I’m giving you all this information over four weeks.
You can start anytime!
By the way, if you'd like even more in-depth weekly videos, be sure to check out my Mr. Money Maxwell Inner Circle!
One more thought on earnings season: I prefer to wait for opportunities post-earnings. Many Good Kids, myself included, have tried strategies for pre-earnings trades, trying to take advantage of the increased volatility. It's simply too hard. So, wait for the trades to come to you. There's no reason to force it. Let's wait for opportunities where we have an edge and then take them.
In terms of the overall market conditions, inflation is proving to be more sticky than some anticipated. The Jobs report on Friday showed a much stronger job market, and bonds are being beat up badly. Yields on bonds are causing major headwinds on dividends. You all know I love dividend stocks, but I also understand and know better than to try to catch a falling knife.
I’m stressing small trades and some patience as we work through the transition of a new president on the 20th. I look forward to 2025’s earning season kicking off Wednesday with JPM! Of course, I will be collaring the shares of JPM and BAC that I bought in last year’s banking crisis. There is no reason to make bets on FRC or SVB when you can buy quality banks at discounts.
So that’s what I’m going to urge all of you to think about: What stocks, companies, and sectors are you interested in owning at lower levels, with the understanding you might need to hold these stocks for a little while?
Have a great week! I hope to see you in our free Discord, but I’ll be back right here next
week.
Happy Trading, Good Kids!
$Maxwell
P.S. If you want more of my personal story, you should check out the podcast I did with Jeremy Hritz.
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