Volatility Box – October 15, 2019 For Thinkorswim

Planning for Upcoming Earnings (NFLX, IBM, etc.)

Yesterday, we created a game plan around trading United Health's earnings (UNH). We said, if UNH gapped up, then probabilities suggest that UNH tends to continue in the same direction for an average of ~$4.35.

UNH did just that today - and we ended up continuing in the bullish direction for almost $6.98 from the open.

Discussion for UAL is available in yesterday's post, here.

Below are some interesting statistics around earnings (using 2-yrs worth of earnings data) for tomorrow:

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ASML Holdings (ASML) - Gap N Go (Bullish) 50% of the time
CSX Transport (CSX) - Gap N Go 75% of the time on earnings beat
International Business Machines (IBM) - Gap N Go 87.5% of the time
Netflix (NFLX) - Gap N Go 62.5% of the time
Crown Holdings (CCK) - Fills its gaps (Bearish preference) 87.5% of the time
Crown Castle (CCI) - Gaps down and fills its gap 75% of the time on earnings beat

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Trade Plan & V-Score Targets

Below are some price targets, based on if the pattern that tends to happen repeats itself, and we get a move in the direction towards our bias.

The price targets are derived using the closest standard deviation, with the V-Score indicator.

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Ticker	Preference	Bias	Earnings	Avg $ Move	Nearest SD	Nearest +/-1 SD
UAL	Gap N Go	Bullish	-	$ 2.01	$ 90.33	$ 91.29
UAL	Gap N Go	Bearish	-	$ 5.09	$ 86.18	$ 82.02
ASML	Gap N Go	Bullish	-	$ 3.80	$ 270.29	-
CSX	Gap N Go	Bullish	Beat	$ 1.85	$ 70.51	$ 72.23
IBM	Gap N Go	Bullish		$ 3.48	$ 153.39	$ 163.95
IBM	Gap N Go	Bearish		$ 2.66	$ 138.49	$ 131.68
NFLX	Gap N Go	Bullish		$ 4.43	$ 292.94	$ 319.41
NFLX	Gap N Go	Bearish		$ 3.20	$ 245.47	$ 207.62
CCK	Gap Fills	-	-	-	-	-
CCI	Gap Down Fill	Bullish	Beat		$ 134.57	$ 153.13

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To be clear, we are looking for CCI to gap down, and then fill its gap, therefore leading to our "bullish bias," despite a gap down.

Day Trading Brexit Deal News

In tonight's video, we discuss a new rule that we added to our trade plan, as a result of seeing a continuous pattern after "Breaking News" events.

The rule is as follows:

If we have a Forex Factory news event, that is deemed to be considered "Breaking News" and "Important" (denoted by a red folder icon), then switch over to the Conservative Volatility Box.

We had a total of 5 trades that set up today, for a net P/L of -$1,925.

Volatility Box – October 15, 2019

Planning for Upcoming Earnings (NFLX, IBM, etc.)

Trade Plan & V-Score Targets

Day Trading Brexit Deal News

Resources:

Stock Volatility Box