Hey there, Power Profit Traders!
Forgive the pun, I couldn’t help myself!
Last Friday, Feb. 18, my Operation Surge Strike group was notified about a bearish setup on Farfetch (NASDAQ: FTCH) ahead of a “trigger event.”
This trade is doing quite well so far, and today I want to use it to highlight an important lesson:
When the market is going nuts like this, many traders’ first instinct is to run for the hills…
But it doesn’t have to be that way, as you’ll soon see.
I understand that headlines like these (courtesy of Bloomberg, MarketWatch, and CNBC, respectively) can be scary:
But with the right guidance, education, strategies, and tools like my proprietary A.I. system, Brutus in your arsenal, ANY market environment can be a profitable one.
And the Surge Strike FTCH trade we made ahead of the company’s earnings report tonight is just the latest example of that.
How We Played $FTCH Without a Dog
Farfetch is a luxury and fashion apparel company, and it’s announcing earnings after the close today!
In preparation for the earnings announcement, I bought to open FTCH put options on Friday, here:
FTCH stock and IV at EOD Feb. 23As you can see on the chart above, the bearish position was already doing well, as of this writing, and
Surge Strike members may have already cashed in big by the time you read this.
Why a trade before earnings?
In three of the past four earnings periods, FTCH stock historically moved down in the six days into earnings, accompanied by an implied volatility (IV) surge.
Buying puts on FTCH six days before earnings produced an average 83.38% return on investment (ROI), accompanied by an average 92.59% IV surge, per my proprietary A.I. system, Brutus.
Historical FTCH stock and IV on Feb.18So I was essentially hoping history would repeat, allowing us to make money two ways:
- On the directional move lower, which would move my put options deeper into the money, and
- On the accompanying IV surge ahead of earnings, as the heightened demand for FTCH options increased premiums
Surge Strike members receive my trade ideas before anyone else, and each trade idea comes with specific entry and exit criteria determined by BRUTUS, so you know when and how to trade each setup!
If you want to watch recent LIVE trading sessions where we dive deeper into how it all works, check out my replay area here...
That’s all for today! Keep an eye out for tomorrow’s newsletter!
Tom Gentile
America’s #1 Pattern Trader
