This week we had the opportunity to witness an ideal example of an earnings release trade. We share it here for those who are new to stock trading to get a clearer picture of how trading earnings can go.
On June 4, Tiffany & Co reported its Q1 earnings before market open. The company is a favorite among earnings traders because its stock tends to make moves after reporting. Wall Street was expecting the company to report earnings per share of $1.01, but there were whispers among analysts at a possible EPS of $1.03.
$1.03 was precisely what Tiffany & Co reported, which led to a gap up in the price. Within two hours of the market opening TIF stock went from $90.20 to $95.87, netting savvy earnings traders a quick 6.3% profit in a couple of hours. It was the perfect combination of a rumour that proved to be true and a report that was released before the market opened, allowing for a gap up at market open even though the company’s earnings were actually lower than Q1 of 2018.
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