![Day Trading Earnings - Today's Picks [How To Find Them]](https://i.ytimg.com/vi/pwKkNKI7HvU/maxresdefault.jpg "Day Trading Earnings - Today's Picks [How To Find Them]")
Day trading earnings can provide fast profits. Price discovery happens instantly and day trading earnings requires stock searches. Try our research for $29 Earnings announcements often result in large stock moves. New information impacts the future of the company and there is a price discovery process. Consequently, there is an earnings day trading opportunity. Technical chart patterns help to determine the direction.
Option trading requires good option liquidity. We need to have tight bid/ask spreads to reduce slippage. If I feel that the stock has excellent upside potential, I buy weekly in the money options with a high delta. I want to make sure that I'm not paying a lot of time premium. Option implied volatility is high right after the announcement and I don't want to fight a decline in implied volatility (Vega). If the stock is very choppy and I can identify a strong support level I will opt to sell bullish put spreads below that support. This provides cushion and I can let the stock to move around while I take advantage of time decay and a collapse in implied volatility. For instance, if a stock blows through the 200-day moving average I can lean on that technical support level and sell a bullish put spread below that technical support. Earnings releases also set up excellent swing trading opportunities. Use the same rationale and game plan.
The market momentum is currently strong and the trend is higher. Right now we are looking for stocks that gap higher on the earnings announcement. When I day trade earnings I like to look for two long green candles (5 minute bars) closing on their high in the first 10 minutes of trading. If there are more green candles grouped together it is even better. This indicates strong buying and the stock is likely to move higher. I also like to see a move through major technical resistance on a daily chart. This could be major moving averages, horizontal resistance or downward sloping trendlines. These breakouts tell me that sellers are out of the way and that the stock has a clear path higher.
If there are 4-5 long green candles closing on their high, the first retracement is usually a good entry point for a long position. There are typically two or three of these mini dips before the stock hits meaningful resistance and each is an entry point for day trading longs. Option Stalker has a five minute chart for each stock the day that it released during the last year. We can often spot a pattern over the last 4 earnings reactions.
It is important that the stock holds the opening price when it gaps higher. If that price fails, we are likely to see more selling before it finds support and the gap is likely to fill.
Stocks sometimes take a day or two to show their true colors. Searches that look back at the earnings reactions over a few days are incredibly useful. Post earnings trades take advantage of the price discovery process and disequilibrium. This is an excellent opportunity for traders.
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