While true for many aspects of quantum mechanics, traders and investors have several tools to help make accurate predictions in the financial markets. Such predictions can be particularly useful for active traders during earnings season when stock prices are most volatile. During these times, many traders and investors use options to either place bullish bets that lever their positions or hedge their existing positions against potential downside. In this article, we'll look at a simple three-step process for making effective earnings predictions using options. See how predictions makes your decisions easy and worthy.
In analyzing the chain of opportunities- If you are a stockpicker, you are always ready for unusual market changes, risks and losses. Predictions keeps you aware well before you get into the mouth of these three sharks. Even, predictions make you follow a chain of opportunities to put the stock value in. For example, if the predictions are in favor of abc corp. and giving you a list of last some ups of the company then you should add this stock to your account to gain the opportunity of stock’s growth.
In comparing open interests- Make sure that the current volume exceeds the prior day's open interest, which indicates that today's activity represents new positions. Predictions help a lot.
In determining the magnitude of your step- While analyzing options to invest, predictions also determine the magnitude of the anticipated move. Since most options appreciate in value when volatility increases, implied volatility can tell us when the market is anticipating a big move to the upside or downside.
Also, in deciding upon hedging and leveraging- While we only really have access to trading volume, we can use the bid and ask prices and trading data to make fairly accurate assumptions. Simply put, trades hitting the bid price are likely selling transactions, while those hitting the ask price are likely buying transactions. Traders and investors can also look at the option chain for various types of options strategies that are most likely to occur around earnings season.
For such accurate predictions, switch to BINARY OPTIONS PRO. For the stock pickers who are into Binary options trading and forex trading get a responsive and automated software to predict the pricing of stocks. Binary options trading is simply a true or false prediction on where the currency pair will end up at the chosen time frame expiry. For example if you think EURUSD will go up in the next 1 minute, you will either win or lose your trade amount based on the percentage the broker is offering for that currency pair.