How To Profit During October’s Earnings Season

| September 30, 2021

selling put optionsIt’s been a tumultuous 18 months since Covid first descended, roiling personal lives, businesses, and the markets.  While things keep continually flowing, we humans (prisoners to time), like to mark the days segmenting periods in order to assess past actions and set future goals.

Today marks the end of Q3, as September proved to be seasonally weak with the SPDR S&P 500 Index (SPY) and Nasdaq 100 (QQQ) experiencing their worst month since September 2020 — the indices lost 4.7% and 6.1% for the quarter.

Again, the index numbers need to be taken into context in two ways; both are still up some 14% YTD, with those numbers masking the turbulence beneath the headline numbers.  To repeat for the umpteenth time, the big five of Microsoft (MSFT), Alphabet (GOOGL). Apple (AAPL), Facebook (FB), and Amazon (AMZN) account for nearly 27% and 45% respectively of the market-cap-weighted SPY and QQQ.

Until two weeks ago, those names carried the indices higher. However, since then, they’ve lost an average of 7%, as it appears that the market’s rolling over with people contemplating a true market “correction.”  But, in reality, the correction was already well underway.  Even as indices hit new August highs, we now have 50%-plus of the SPY and 25% of QQQ stocks have 10% below all-time highs with nearly 20% have declined by over 20% in the past three months. Meaning, we’ve already had a rolling correction through time and rotation.

I think we’ve heard enough from politicians, central bankers, and the new cadre of epistemologists. Here comes the earnings season, which lets us hear straight from the companies. It should be the acid test for where stocks go from here.

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Category: Earnings Roundup, Options Trading

About the Author ()

Steve Smith have been involved in all facets of the investment industry in a variety of roles ranging from speculator, educator, manager and advisor. This has taken him from the trading floors of Chicago to hedge funds on Wall Street to the world online. From 1987 to 1996, he served as a market maker at the Chicago Board of Options Exchange (CBOE) and Chicago Board of Trade (CBOT). From 1997 to 2007, he was a Senior Columnist and Managing Editor for, handling their Option Alert and Short Report newsletters. The Option Alert was awarded the MIN “best business newsletter” in 2006. From 2009 to 2013, Smith was a Senior Columnist and Managing Editor for Minyanville’s OptionSmith newsletter, as well as a Risk Manager Consultant for New Vernon Capital LLC. Smith acted as an advisor to build models and option strategies to reduce portfolio exposure and enhance returns for the four main funds. Since 2015, he has worked for Adam Mesh Trading Group. There, he has managed Options360 and Earning 360, been co-leader of Option Academy, and contributed to The Option Specialist website.