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> Some of these guys just buy weekly options ahead of an earnings call, Obviously working for the company in question makes it different, but this doesn't seem

> Some of these guys just buy weekly options ahead of an earnings call, Obviously working for the company in question makes it different, but this doesn't seem crazy or unusual. I've worked placed where it was very easy to predict the stock movements ahead of earnings call since the company's success/failure is in public eye a lot (same true for netflix?). The top 5 companies in terms of market cap get lots of attention and analysis. I bet most people could review that data before the earnings call and guess the movement of the stock enough to make money. Again, i would never touch my companies stock on the market but it doesn't seem like you need insider knowledge at a lot of big companies.

H8crilA 5y ago
Then why aren't you a multi-millionaire yet? One can easily multiply their pot every 3 months playing a few companies with simple option strategies, provided it's really that predictable. More importantly, if this is predictable then why is there volatility around earnings? Surely enough people would have figured it out by now.
- vineyardmike 5y ago
  > Then why aren't you a multi-millionaire yet? Well, as you said, not everything is a win, and sometimes you lose. Some people don't have the money to deal with options and handle a loss. But who said i wasn't a millionaire ;)
- smabie 5y ago
  How do you know he isn't?
  - rurp 5y ago
    Okay then, why aren't a million people doing it to the point where the "free" money has been squeezed out of the price?
    - vineyardmike 5y ago
      Most people can't afford to invest significantly enough to buy into expensive trading opportunities like options or day trading, and "buy and hold" investing doesn't yield enough to justify the efforts in research.
fred_is_fred 5y ago
>I bet most people could review that data before the earnings call and guess the movement of the stock enough to make money. If "most people" could do this, "most people" would.
- vineyardmike 5y ago
  Apple is one of the most popular stocks, and one of the biggest companies. After a quick search i found this [1] quote. I bet if you asked most people "will apples stock go up tomorrow? its expected they sold a lot of iPhones" most people would say yes, and if you said "will apples stock go up tomorrow? its expected they sold less than expected numnber of iPhones" then they would say no I think the issue is not that most people can't "guess" the outcome, its that they can't afford (in the short term) the money to invest. Many people take years into their career before they can significantly invest and save money. Especially true for people who can afford the risk of options trading, which is more risky than "buy and hold" investing. The article in question mentions netflix engineers who make large 6 figure salaries. They could probably afford to make well educated bets on many other stocks and profit handsomely after several years. > Birinyi Associates studied Apple’s post-earnings stock behavior since 2009. It found Apple stock has gapped up, or shot higher 65 percent of the time in after-hours trading, right after its earnings report, with an average pop of 4.7 percent. On the next day, whether it gapped up or down, it has traded lower 65 percent of the time for a 0.92 percent decline. [1] https://www.cnbc.com/2018/05/01/heres-how-apples-stock-usually-behaves-after-earnings.html https://www.cnbc.com/2018/05/01/heres-how-apples-stock-usual...
  - rurp 5y ago
    The math isn't exactly hard on this. A person who can reliably make double digit returns monthly or quarterly could literally start with $100 and become rich.
    - vineyardmike 5y ago
      > start with $100 and become rich Practically speaking, this isn't that easy. Most people don't have hundreds lying around to invest, especially not in risky trades. Also, options (what is being discussed) are often a lot more than $100 - Eg. Opening Robinhood rn shows me AAPL options around 150 whhile GOOGL options are 2k+ while AMZN is 3k+. Even if someone is very confident in a stock movement (and realistically, its obviously not guaranteed), thats a lot of money for the average person, especially when they could lose it. You have to be somewhhat well-off to stomach multi-thousand dollar losses - especially at the start. (also earnings are 1 per quarter)
sokoloff 5y ago
This makes no sense if you tug on it just a little bit. Suppose a stock is trading at $100/sh and via analyzing these signals leading up to earnings next week, “most people” could correctly predict that it will pop to $105 after earnings. “Most people” would then logically be willing to bid at least $104.50 (and probably closer if they were more certain), meaning as soon as the information was out to most people, this $5/sh opportunity would be arbitraged away. There are entire firms trying to squeak pennies per share out of the market. To think that some backlog of data that most people could plainly interpret would lead to a pop after earnings is very difficult to believe.
- vineyardmike 5y ago
  I think you're tugging a lot more. I don't think that most people can estimate anything beyond "this earnings call makes the price go up or down [a little/lot]". I'm not referencing some missed arbitrage opportunity, just that general stock movements can likely be predicted before earnings calls for well-reported companies. People with insider trading knowledge don't seem able to accurately predict the exact price, but they know if its good/bad/great news and how wall street reacts to that .
  - sokoloff 5y ago
    Try it. Take 5 companies whose share price reactions might be predictable ahead of time by "most people" and for each of the next 4 quarters make an up/±epsilon/down prediction. See how often you're right.
    - motoxpro 5y ago
      Always trips me out that people think that it's so easy to make money "day trading"
    - Plyphon_ 5y ago
      A few of the consumer broker apps have a 'practice mode' with a few tens of thousand of virtual practice cash to use with the price reacting to real market data - you could do this in real time!

H8crilA 5y ago

Then why aren't you a multi-millionaire yet? One can easily multiply their pot every 3 months playing a few companies with simple option strategies, provided it's really that predictable. More importantly, if this is predictable then why is there volatility around earnings? Surely enough people would have figured it out by now.

vineyardmike 5y ago
> Then why aren't you a multi-millionaire yet? Well, as you said, not everything is a win, and sometimes you lose. Some people don't have the money to deal with options and handle a loss. But who said i wasn't a millionaire ;)
smabie 5y ago
How do you know he isn't?
- rurp 5y ago
  Okay then, why aren't a million people doing it to the point where the "free" money has been squeezed out of the price?
  - vineyardmike 5y ago
    Most people can't afford to invest significantly enough to buy into expensive trading opportunities like options or day trading, and "buy and hold" investing doesn't yield enough to justify the efforts in research.

fred_is_fred 5y ago

>I bet most people could review that data before the earnings call and guess the movement of the stock enough to make money. If "most people" could do this, "most people" would.

vineyardmike 5y ago
Apple is one of the most popular stocks, and one of the biggest companies. After a quick search i found this [1] quote. I bet if you asked most people "will apples stock go up tomorrow? its expected they sold a lot of iPhones" most people would say yes, and if you said "will apples stock go up tomorrow? its expected they sold less than expected numnber of iPhones" then they would say no I think the issue is not that most people can't "guess" the outcome, its that they can't afford (in the short term) the money to invest. Many people take years into their career before they can significantly invest and save money. Especially true for people who can afford the risk of options trading, which is more risky than "buy and hold" investing. The article in question mentions netflix engineers who make large 6 figure salaries. They could probably afford to make well educated bets on many other stocks and profit handsomely after several years. > Birinyi Associates studied Apple’s post-earnings stock behavior since 2009. It found Apple stock has gapped up, or shot higher 65 percent of the time in after-hours trading, right after its earnings report, with an average pop of 4.7 percent. On the next day, whether it gapped up or down, it has traded lower 65 percent of the time for a 0.92 percent decline. [1] https://www.cnbc.com/2018/05/01/heres-how-apples-stock-usually-behaves-after-earnings.html https://www.cnbc.com/2018/05/01/heres-how-apples-stock-usual...
- rurp 5y ago
  The math isn't exactly hard on this. A person who can reliably make double digit returns monthly or quarterly could literally start with $100 and become rich.
  - vineyardmike 5y ago
    > start with $100 and become rich Practically speaking, this isn't that easy. Most people don't have hundreds lying around to invest, especially not in risky trades. Also, options (what is being discussed) are often a lot more than $100 - Eg. Opening Robinhood rn shows me AAPL options around 150 whhile GOOGL options are 2k+ while AMZN is 3k+. Even if someone is very confident in a stock movement (and realistically, its obviously not guaranteed), thats a lot of money for the average person, especially when they could lose it. You have to be somewhhat well-off to stomach multi-thousand dollar losses - especially at the start. (also earnings are 1 per quarter)

sokoloff 5y ago

This makes no sense if you tug on it just a little bit. Suppose a stock is trading at $100/sh and via analyzing these signals leading up to earnings next week, “most people” could correctly predict that it will pop to $105 after earnings. “Most people” would then logically be willing to bid at least $104.50 (and probably closer if they were more certain), meaning as soon as the information was out to most people, this $5/sh opportunity would be arbitraged away. There are entire firms trying to squeak pennies per share out of the market. To think that some backlog of data that most people could plainly interpret would lead to a pop after earnings is very difficult to believe.

vineyardmike 5y ago
I think you're tugging a lot more. I don't think that most people can estimate anything beyond "this earnings call makes the price go up or down [a little/lot]". I'm not referencing some missed arbitrage opportunity, just that general stock movements can likely be predicted before earnings calls for well-reported companies. People with insider trading knowledge don't seem able to accurately predict the exact price, but they know if its good/bad/great news and how wall street reacts to that .
- sokoloff 5y ago
  Try it. Take 5 companies whose share price reactions might be predictable ahead of time by "most people" and for each of the next 4 quarters make an up/±epsilon/down prediction. See how often you're right.
  - motoxpro 5y ago
    Always trips me out that people think that it's so easy to make money "day trading"
  - Plyphon_ 5y ago
    A few of the consumer broker apps have a 'practice mode' with a few tens of thousand of virtual practice cash to use with the price reacting to real market data - you could do this in real time!