Live: Tuesday, Nov. 6, 2018

12:50 p.m. New York time

I’m look at the five top-quintile prospects for earnings plays, using these criteria: 1) The higher the implied volatility rank, the better; 2) the higher the market capitalization, the better; 3) a chart running contrary to the S&P 500, i.e.,  above the 12-month moving average is better than below.

DVN and KORS are the leaders for criteria one and two, but they fail on criteria three. The next one down, ETSY, meets all three criteria, although with a market cap of $5 billion, it’s not as high as I like. I’m going to give in to my inclination pass on it, preserving funds for larger companies announcing later.

11:40 a.m. New York time

I’ve updated my GILD analysis with results.

10:40 a.m. New York time

A exit order on GILD was filled moments ago. It’s somewhat under my normal management point, 25% of maximum profit, but since I expect a sharp market decline, best in my mind to take the profit and run.

I have eight possible earnings plays on my desk this morning, with five having top quintile implied volatility ranks.

I haven’t made decisions yet. The most liquid have market caps in the 10s of billions of dollars rather than the hundreds of billions, which is a drawback.

Here’s the list:

1st quintile (81-100): DVN, ETSY, GRPN, KORS and LC

2nd quintile (61-80): KTOS and ODP

3rd quintile: FTR

Today’s Book

The Signal and the Noise

Why So Many Predictions Fail — but Some Don’t

by Nate Silver

Nate Silver got his start predicting sports, moved on to competitive poker and finally became a nationally recognized name when he applied his considerable skills to the predicting elections.

Today is election day in the United States, so what better time to open Silver’s 2012 book on statistics and prediction? I found the book to be fascinating the first time I read it, and even more so the second time.

I’m a trader, and part of my living comes from my ability to understand statistics and to predict what the market will do within the confines of those numbers. Although not focused specifically on the markets, this book provides an excellent gateway to Silver’s methods, and for me, part of the attraction has been to try to link in my own mind his techniques of analyzing sports and politics and my techniques for assessing trades.

A good read that has been useful in focusing my mind on the statistical aspect of trading. I highly recommend it.

More about the book

The status of my current options positions.

sym option debit share price beyond profit zone curr % max profit net prft/shr $ option days left
EWZ 1.30 40.54 (51.2) (0.44) 10


5.15 70.25 16.7 1.03 45
HON 6.34 148.85 0.0 0.00 10
JNJ 6.97 141.91 high (24.5) (1.37) 10
MCD 8.97 179.76 high (44.7) (2.77) 10
MSFT 7.64 107.98 11.2 0.96 45
PM 3.65 88.94 high (6.4) (0.22) 10
SPY 4.47 274.32 (5.9) (0.25) 45
UPS 8.34 107.65 (1.7) (0.14) 45
WBA 4.81 79.95 high (35.1) (1.25) 10

And of my shares positions.

sym share price net result % net profit $ days held
AAPL 203.41 -9.2% (20.55) 53
CHK 3.74 -6.6% (0.27) 53
FXI 41.11 -0.2% (0.10) 53
SPXU 37.60 -7.3% (2.96) 175
TSLA 345.79 13.4% 40.80 36

By Tim Bovee, Portland, Oregon, Nov. 6, 2018

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.


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