Spread Betting on Results Release?

[barneygumble]

Just a quick question, does anyone place spreads before the market opens but after good company results have been released? Just wondered if this is possible or if the market prevents you making a profit out of this situation. I have done some spreads via a demo account on bullbearings.co.uk and have made a profit. Just wondered if this is achievable on a real account?

Thanks

Please excuse the noob questions.

 

[Masquerade]

Problem is you don't know where the market will open and you can't choose to buy at yesterday's close with today's results. If market's not open, you can't trade it and if it's open then everyone already knows about it and the market's taken it into account somewhat so you have no advantage.

 

[barneygumble]

Doh, there goes that theory.

 

[Masquerade]

If it was that easy, everyone would be doing it. You can take a view on results before they come out, take a position a week/day before, but then that's really speculative stuff. I guess you could have an order to open - but MM's mark up/down the shares before market opens, but there's always activity going on at the open as the market finds a price it's happy to trade at. You can use results to your advantage but you'd have to be pretty quick.

 

[ukdaytrader]

Just a quick question, does anyone place spreads before the market opens but after good company results have been released? Just wondered if this is possible or if the market prevents you making a profit out of this situation. I have done some spreads via a demo account on bullbearings.co.uk and have made a profit. Just wondered if this is achievable on a real account?

Thanks

Please excuse the noob questions.

Depends on what markets you are trading. US markets allow pre and post market trading. The spreads are wide though and you need to be convinced of direction, else you will be hammered on both the spread and the the stock price movement if it goes against you. Normally if the results are better than expected the pre and post market values are adjusted accordingly.

Take the example of HOTT - announced results last night after markets closed. The below is the pre market trading that happened last night and this morning. The spreads were around 20 - 30 cents which is quite high for a $6 stock.

After Hours Trade Reporting
Pre-Market Charts | After Hours Charts
After Hours
Last: $ 6.64 After Hours
High: $ 6.73
After Hours
Volume: 129,932 After Hours
Low: $ 6


Pre-Market
Last: $ 6.15 Pre-Market
High: $ 6.72
Pre-Market
Volume: 10,560 Pre-Market
Low: $ 6.08

The current share price is 6.34. If you thought it was going to go up and bought in at say 6.72 pre market you would have lost a lot cash.

Not quite sure for the UK, I think level 2 allows you to place your position pre market but not sure if you can actually trade pre market.

 

[tomorton]

You can SB shares after results are out. I have done this and have read Alpesh Patel describing this strategy also. Wait for results to come out and about 30 minutes of trading to allow the market to set the direction, then jump in in same direction soon after 0830. Price on results day generally continues this early move through the day and into the next, sometimes into the third day. Alpesh suggested using the close of the day prior to the results day as your stop. You could experiment using the low if long, the high if short.

I twice made 10% net profit on shares by going long at 0830 and getting out at lunchtime. However, results days are sometimes starting points for extended trends, so your strategy should allow for the possibility of exceptional gains in a new trend.

 

[megamuel]

Maybe you could incorporate a strategy like that which Mr. Charts uses. He basically waits for a stock to get moving and jumps on board with the aim of riding that move for as long as it lasts. I'm sure he'll tell me off for that description as its not quite that simple but here, check out his thread - http://www.trade2win.com/boards/us-stocks/38036-how-make-money-trading-markets.html
If you buy investors chronicle, you can find out company results dates, I'm sure you could do this online also then see how the stock moves on the day. I wouldn't place any orders before the market opens though!

Sam

 

['Scope]

yahoo finance has an earnings release calander