EarningsBeats.com Digest for July 15, 2020
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Dear Digest Subscriber,
Yesterday, EarningsBeats.com's Chief Market Strategist Tom Bowley conducted his monthly Options "Max Pain" webinar and, if you want to get the most thorough explanation you will EVER get, you will want to watch this recording! Tom lays out in clear detail how Market Makers have the upper hand and how they will do anything possible to avoid paying out options premiums into options expiration Friday. He also shows why specific stocks could
make big moves - either up or down - ahead of this week's options expiration.
This recording is available to all EarningsBeats.com subscribers INCLUDING anyone who signs up for a NO COST 30-day trial. So if you are currently NOT an EarningsBeats.com subscriber and want to add this timely recording to your educational library, just click below to get access to the recording.
One Time When Relative Weakness Might Be Good
If you've followed me for awhile, you probably know by now that I'm not a fan of energy stocks. However, once a month, as we approach options expiration Friday (3rd Friday of every month), beaten-down stocks can get a temporary lift - and energy certainly qualifies as a beaten-down group. Therefore, we might see a lift in Devon Energy (DVN) shares as we approach the end of the week, or perhaps moving into next week. Why? Well, there are
a lot of in-the-money puts currently as retail traders have been betting on a further decline in DVN shares. For market makers, there's a breakeven point where in-the-money call premium equals in-the-money put premium (ie, max pain). For DVN, that breakeven point with respect to July options is just above 13.00:
If DVN remains where it is, or even moves lower, it wouldn't necessarily result in market makers losing money, but a recovery back closer to 13 over the next week or so would add to market makers' profits. I discussed this concept and tried to explain it in detail during yesterday's Max Pain webinar. If you're not aware of max pain and its short-term stock market effects, it might be worth your time to check out a trial of our service and watch the
recording from that webinar. I don't know if DVN can reverse its recent skid - even on a short-term basis - but if it does begin to climb, I won't be at all surprised.
Happy trading!
Tom Bowley
Chief Market Strategist
EarningsBeats.com
Better Timing. Better Trades.
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