11/21 Earnings Preview For The Week Ahead

As I said last week, this earnings season since you all now have access to my database, I won’t post every single trade on here for the previews, you can easily access those through the link in Friday’s recap for names that interest you. I will instead highlight 5 names reporting this week with an actionable trade idea based off the charts and option flows I highlighted.

Here is the earnings calendar for the week ahead. There were alot of names to pick from but in this recap I will be highlighting Netflix, Tesla, Intel, American Express, and ServiceNow.

Before I get into the preview below, I want to answer a question I’ve gotten alot recently. I get so many emails, mostly from some newer readers, on why I typically suggest put sales or selling put spreads vs just buying calls or stock. The reason is most investors are too busy chasing things to the upside. My focus is on selling puts because I always want to enter lower. Why pay full price when you don’t have to? We can look at charts and see where support is, we can see where the moving averages are and I want to get in lower with those supporting me. Names mostly always pullback to those moving averages at some point. Obviously it’s nice when names like NVDA just go straight up everyday, as it has recently but most equities do not trade like that and even ones that did like TSLA, eventually don’t. So my first goal is to not be stuck holding a name as it declines. The only way to potentially raise the likelihood of not doing that is deciding where on a chart I want to go long and starting my approach down there, selling puts. This way I am involved if it goes up, but should it go down, I haven’t lost money until it goes through where I sold my puts. Even then assuming I sold at a key support level, I can just take the shares and start selling covered calls vs them. You’re never truly stuck if you approach the market like this with quality names.

Just remember stocks have 3 potential outcomes: Up, Down, Sideways. If you’re long or short, you only profit on one of those outcomes. When you sell puts or put spreads lower, you profit on 2 and possibly 3 of those outcomes, up and sideways AND depending on how far down you sell puts possibly even down. Therefore in the realm of probabilities, selling puts increases your odds of a successful trade. I know this goes over the head of everyone trying to buy short term calls looking for those big 50-200% gains, and it doesn’t help when people post making 500,000% on SMCI friday. Eventually though, the market will stop going up most of the time as it has the last 18 months, and those guys buying short term calls will be crying when it happens like in 2022 when everyone stopped posting their returns. The conservative people selling puts lower at key support levels, attempting to buy good names lower, they will survive.

So while it seems like you’re missing out not gambling on calls while everyone is back to posting their gains in recent months, just relax. This is a long game and it’s you vs the market, nothing more. Try not to focus on what others are doing. Your focus should be on beating the market nothing more. For the near term call buyers, in my experience many do well but most end up overdoing it and all it takes is 1 downturn to wipe them out. I liken it to this chart below

My point of all this is just to say selling puts is my approach to consistently attack the market but at lower levels. That is why I usually suggest put sales in my trade ideas. You should never pay full price for a stock unless you have done some work and have a thesis where the equity is worth far higher than it currently trades. I like the approach because I can profit as names go up, flat, or even down in some cases. Think about that, you can potentially win in whatever scenario happens…………

1. Netflix