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Many times holding leading stocks through earnings is more like placing chips on red or black in a casino than trading with an edge. My best trades have always been playing the earnings expectations leading up to earnings not the actual earnings themselves. The dangers are plentiful,a good earnings report but not good enough and the stock plummets. A bad report and the stock is cooked before you even have a chance to exit in after hours trading. It you are going to trade earnings for whatever reason, trade SMALL, risk little.

  1. You can buy Apple stock betting that the earnings are even better than analyst projections and it in the after hours the stock breaks back above all time highs and you are richly rewarded. (Bullish)
  2. You can short Apple stock believing that the earnings are already baked in and that any hint that the company’s earnings are not out of this world the stock will crash viciously and you will be rewarded with your short. (Bearish)
  3. You can make a directional bet with much less capital buy buying either puts or calls at the strike price of your choice. (Limiting Capital at Risk)
  4. You can bet that it trends more strongly one way or the other but admit that you do not know which way it will go. So you could buy both option calls and puts either at the same current strike price as the market to create a straddle gaining all the move one way or the other. Or buy out of the money calls and puts as far out as you think the stock will move. (Trend betting)
  5. Or you can sit safely in cash waiting for the wild swing to occur and then go with the trend that emerges. (Manage Risk)

Whatever you decide to do, always manage risk carefully.