12 Keys to Trading Earnings for Profits
Chris Johnson and Jon Lewis, April 16, 2009
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#12 Leveraging the Earnings Advantage
While buying or shorting stocks based on earnings should provide handsome returns, the real money is made by buying call options on stocks that are due for a sharp move to the upside ... and buying puts on those that are likely to disappoint. The leverage provided by short-term options (we usually recommend options due to expire within a month for earnings plays) can be dramatic if the stock moves sharply in the expected direction.
But why should you consider options? Actually, there are several reasons to trade them for any portfolio.
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