I feel I need to write something based on recent experience.
IBD50 stocks are high growth stocks rated by investors.com. Starting from July, I bought a few call options on some of stocks and bet them for earning. In the past years, I learned not betting earning report by buying stocks. Recently I learned to hold a small number of call options betting the good outcome of earning. I used this strategy on IBD50 stocks. My outcome is terrible for this 2-month trading period. I think the cause is that.
1. unlucky to pick up wrong stocks or because these stocks are in late stage base.
2. market condition: everytime market made a new high, then it quickly reversed. Most of the breakout from new high I saw were sold off hardly.
Losing trades:
The stocks I traded are LITE, MOMO and VEEV. All earning were good and beated expectation. However the stock price dived hard.
1. LITE: I bought at $1.1. Initially it was up to $2. I had high conviction on it. The stocks broke out then sold off hardly. The earning is in-line. It went up in the morning pre-market due to conference call to the price I initially bought the option. However, there was not ask/bid price of option at the high price. I took bitter lose sold at 0.15.
2. MOMO: I bought 18Aug2017 40 call. I let the option expired as the stock was 44. MOMO dived from $47 to $36 in the morning of earning day. In the morning when I woke up around 7am, the stock price was 42~ish down from 47-ish around 4am. I made bad mistake without closing my position.
3.VEEV: yesterday night bad earning, stock closed around 61 after-market. Right now stock price is only 55-ish. I bought at $2.35. I recall initially this is a winning trade (went up to $3). Now it is worthless.
Winning Trades:
only TTWO.
Conclusion:
lesson learned:
1. need to identify early base of IBD50 stocks.
2. do not blindedly bet the earning of IBD50 stocks
