Options and Earnings Season

A few days ago, Maria Bartiromo, said, "Fundamentals Rule."
I agree, wholeheartedly agree. The best part of fundamental analysis is earnings. For years I've shouted, "Follow Earnings, Follow Earnings, Follow Earnings."

Here is a brief synopsis of this type of analysis. Basically, it's looking at the health of a company: Earnings, Earnings Growth, Debt, Management, Cash Flow. But of all of these the prominent aspect is earnings—and I'll add to that the prognostications and other statements by the company and outside pundits.

Next week, Apple, Amazon, Google and Microsoft all make their announcements. This will be a good test for you new people. Watch the run up into the statements, the numbers, and the forward looking statements.

If you want to go deeper, look at the charts of the past year and see the movements around previous announcements, at each quarter.

I don't like to do many trades around each particular companies earnings date—especially in writing cover calls. Remember one of the new risks in WCC is that you sell away the upside—everything above the strike price you've chosen. It doesn't hurt to wait a day or two.

NOTICE: We've posted another podcast. These are FREE. The one on margin should be studied. We'll do part two next week.

Wade Cook