dani-shay dani face dani quote
dani-mobile

Hedging During this Season with the Nasdaq

With earnings reports coming in over the last week and next few weeks, there’s a lot of speculation about what might happen to the market, who might report what, and how traders and investors alike can be prepared.

No one wants to be on the wrong side of an earnings report.

Especially when the trend going into this season has given us a clear picture of several high momentum stocks losing their momentum. Frankly, they’ve been rather soft.

So here’s a few things to know about earnings, how to play it, and what might happen…

Click the video above to watch my entire segment talking about hedging in the options market on Nasdaq Trade Talks.

To start, one of the best ways I’ve found to play a market like this one, is to take advantage of hedging with the options market.

Now there are several ways you could do this…

Nasdaq 100 Behavior

The Nasdaq 100 is a proprietary index the Nasdaq has, and I love to use it to look at the history of a certain stock going into earnings. After all, I love to trade the run into earnings, and understanding the history of a stock is crucial if you want to successfully trade ‘pre-earnings.’

So for this season, I used the Nasdaq 100 to look at the behavior of the market after big-name tech companies reported.

Why?

Well many times the market rallies with excitement after these particular companies report, but then historically, within the next 2-3 weeks… it settles back down (or even drops aggressively). So based on my analysis, I anticipate that within the next few weeks, we’ll see the index pull back at least a little bit.

So keep that in mind for potential trade opportunities.

Looking at this data, along with the other chart of the Nasdaq 100 Targets that I included in the video above, helps us predict what price action might look like going forward.

Then how could a long-term portfolio investor hedge themselves with that in mind?

QQQ Order Entries

The first question to address there is what size account you’re trading with.

But here’s what I do (generally with smaller accounts)…

I look at trading QQQ. Why? Because it’s a cheaper product, and I like trading multi-legged options that have a lot of different strikes to work with. This works perfectly with a butterfly, which is a favorite of mine right now.

If you want to know more about how I hedge with a butterfly on the QQQ I address that in the video too.

Plus, I’ll be diving more in-depth on hedging with Nasdaq products during my upcoming webinar “Defensive Trades for News Drive Action” on Monday, November 4th at 7pm Central. If you want to join, grab a spot here, it’s totally free.

Leave a Comment

Up Next...

Pot stocks are smoking?

What goes up? With the market at the highs, like we talked about in the newsletter recently, my primary consideration has been short squeezes. This is because these tickers provide quick opportunity, oftentimes overnight, and typically on a large scale. Last week, we talked about tickers like BYND and AMD.  This week, we’ve had several … Read more

Read More

Several key trading setups to use

And my current watchlist for you to check out… When the market’s up at the highs, you may feel like there isn’t much to do. Now, if you’re a normal, buy the dip, trend follower (like I‘ve been for so long) that’s definitely the case. However, I have different setups for different types of price … Read more

Read More

Doubling Down on Volatile Stocks?

One of my favorite stock holdings, and tickers to trade in the options market is Advanced Micro Devices. Also known as AMD. This stock amounts to my best percentage gains in the stock market last year, in addition to one of my Top Ten traded options tickers. Why? When I buy stock, I want to … 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 Appearances in 2020

all-as-seen-on-logos