dani face dani quote

Banks Getting Ready to Report…

Hey 5-Star Trader,

“Tuesday Trade” Journal: One of the most important concepts in trading is to review your work, and learn from the good and the bad. It’s critical to identify what’s working — to do more of it. So, to lead by example, each Tuesday, you’ll get a trade from my trading journal, in which I explain my thought process from start to finish. Trading is all about finding something that works, and applying it over and over again. That’s how you find trading success. So study up on this “Tuesday Trade” and let’s get to work.

For this week’s “Tuesday Trade,” I want to outline my three-week trade in JPMorgan Chase (JPM).

 

Why JPMorgan…?

April marks the beginning of quarter two, and many companies in the next 13 weeks are preparing to report their earnings. One of my favorite setups going into this reporting season is the “run into earnings” trades and because I know banks tend to report first, I was looking for a bank to take a trade in.

After scanning the market for potential candidates, I landed on JPMorgan Chase (JPM) and entered a long call butterfly @3.08 Limit Orders (LMT) on March 24th.* My target was $160, making it a 1:2 risk-reward ratio and I did it because the 21-day average has a move of about 4.69% which is about $7.00.

*Note: The entry on March 24th was deliberate. This day marked the 21-day period before theJPM earnings report release date set for April 14.

Due to the volatility in the market at that time, I decided not to use stops. Instead, I used smaller position sizes to mitigate my risk. I usually put on 5% positions, but was in 2.5% for this particular trade. (That’s a key trading strategy I emphasize in my mastery program.)

 

Trade gets rough fast…


One week into this trade and the market was choppy. We saw the Nasdaq was wavering between the 100 and 200 Simple Moving Average (SMA) to the downside and the 50 SMA to the upside, but I was still confident in this trade. JPM was a relative strength winner among the banking sector, and as we got closer into the 21-day window prior to earnings in tech, I expected more price movement in the Nasdaq to the upside.

Timing early exit to take gains…

After almost three weeks of holding this long-call butterfly, I finally decided to close my trade in JPM two days before their earnings report date for @6.85 LMT. In the back of my mind, I know it could have rallied a bit more, especially into the last day before its report, but the fact that it had one day left in expiration pushed me to take profits. It is also important to note that my choice for the date of expiration was intentional. As a rule of thumb, I always set my “run into earnings” trades to expire one day or more before the report is released. This is because I don’t want the outcome of the report to be entangled with the trade I’ve taken prior to the results.

Capping off this week’s “Tuesday Trade,” the “run into earnings” season is fully upon us, and as more reports come out, the market will transition into trading the earnings report. It is totally possible to catch these moves, as we know they are coming, just make sure you’re timing them right!

Learn more about the timing of earnings trades, and live-trade with me this week during earnings report moves in my class! Click to learn more.

Leave a Comment

Up Next...

Inflation Not To Blame For Market Pullback…

Hey 5-Star Trader, May is seasonally a weak month for the market and the media likes to blame different things for its poor performance. Lately, they’ve named the fear of inflation as the latest culprit. Yes, there are some legitimate fears of inflation, especially with the excess money printing thanks to several stimulus checks, but there … Read more

Read More

Entering Final ‘Run into Earnings’ Wave…

Hey 5-Star Trader, “Tuesday Trade” Journal: One of the most important concepts in trading is to review your work, and learn from the good and the bad. Identifying what is working is critical — to do more of it. So, to lead by example, each Tuesday, you’ll get a trade from my trading journal, in … Read more

Read More

Don’t Count Out ‘Average’ Retail Traders

Hey 5-Star Trader, Recently, Dogecoin has been making headlines as its value continues to spike, leaving Wall Street in awe. Are we on the cusp of a trading revolution? Is history repeating itself? At the beginning of this year, we saw a major market shift in favor of Gamestop (GME). Previously, it was a dying … Read more

Read More

Subscribe Today!

Want to walk the path to trading success together? Join Danielle’s “Five Star Trader” E-Letter for market insights, tips, tricks, and special bonuses.

Sign Up Now

Free Downloads

Squeeze Checklist

When you find a squeeze, check these boxes to see if you’re looking at a higher probability bet.

Risk Checklist

Before we can make money we must define the rules that define our risk parameters.

High Probability Plays in a Directional Market

Download Danielle's free eBook

10 Steps to Becoming a Successful Trader

Commit to becoming a successful Trader

Strategy Selection Risk Gauge

Danielle focuses on creating a constant stream of income through the selection of trend-following, directional plays.

Upcoming Appearances

Check Back for Upcoming Dates

all-as-seen-on-logos