Megaphone icon ETF Database is now VettaFi. Read More >
ETFdb Logo
ETFdb Logo
  • Channels
    • Active ETF
    • Alternatives
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Dividend
    • Dual Impact
    • Emerging Markets
    • Energy Infrastructure
    • Entrepreneur ETF
    • Equity ETF
    • ESG
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Future ETFs
    • Gold & Silver Investing
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Modern Alpha
    • Multi-Asset
    • Multi-Factor
    • Nasdaq Investment Intelligence
    • Portfolio Strategies
    • Retirement Income
    • Smart Beta
    • Thematic Investing
    • Volatility Resource
  • Database
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
    • ETF Data for Journalists
    • ETF Nerds
  • Research
    • First Bitcoin ETF
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
    • ETFs Future-Forward 2021: An iShares Investing Symposium
    • Three Themes for 2021: An iShares & MSCI Investing Symposium
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Videos & Podcasts
    • ETF 360 Video Series
    • ETF Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. 3 ETF Plays for Earnings Season
News
Share

3 ETF Plays for Earnings Season

Stoyan BojinovJul 15, 2015
2015-07-15

It’s time to brush Greece and China worries off to the side, and bring our attention to what really matters for investors–corporate earnings.

There’s a plethora of ways to utilize ETFs, and especially so during earnings season; below are three suggested trades you can add to your arsenal of strategies.

1. Hedge Yourself

Take advantage of the broad-based nature of ETFs by using them as a hedge against any outsized single-stock positions you may have (and are worried about). For instance, let’s say your portfolio has a sizeable allocation to Intel (INTC) stock and you’re worried about the impact of a potentially volatile, and negative, earnings release.

If you then short-sell, or buy a put option on an ETF that holds a meaningful allocation to that same stock that you own, you can give yourself some sort of cushion in the event the company craters after an earnings release. An easy way to do this research is to use the Free Stock Exposure Tool —narrow down your list of ETFs, and then formulate a trading plan from there. In the case of Intel stock, using the Semiconductors ETF (SMH A-) would be a wise choice given its heavy allocation to the chip-maker.


Content continues below advertisement

2. Trade Where the Action is

If you’re looking to capture short-term moves around earnings seasons, then you need to be focused on areas of the market that are known for delivering big surprises and massive price moves to go along with them. In other words, you need to watch the sector ETFs that correspond to the most volatile groups of stocks on earnings day.

Based on research from Bespoke, below are the earnings reactions profiled by sector:

volatility by sector

Based on the data above, traders would be wise to focus on:

  • Broad-Based Tech ETFs
  • Broad-Based Consumer Discretionary ETFs

And some more granular options targeting Internet, Social Media, and Semiconductor stocks.

3. Amplify Your Bets

One of the challenges that traders face is finding setups with an attractive risk/reward—the frustration is that sometimes the market just won’t budge as much as you need it to. The real problem arises when you find yourself stretching for riskier opportunities given your narrower set of choices. One way to alleviate the challenge of finding “trade-worthy” opportunities is to add leverage to your strategy, but not in the traditional sense where you have to put more of your capital on the line.

If you’re looking to magnify your trading returns, you can do so without overexposing yourself to unnecessary risks—and you can do that in two ways:

  1. Use Leveraged ETFs: Be sure to read about the risks and nuances associated with these types of instruments.
  2. Integrate Options into your Trading Strategy: instead of speculating by simply buying a call or put, you can construct for example a bull call spread that has a clearly defined downside risk, while still enjoying the leverage component that is inherent to options.

The Bottom Line

There’s no shortage of trading strategies available at your fingertips thanks to the proliferation of ETFs. Remember that earnings season is a tumultuous time on Wall Street, so it’s important to take simple, but important, precautions when executing any sort of ETF trade; be sure to utilize limit orders when buying or selling and especially stop-losses for open positions in leveraged or inverse funds.

Follow me @SBojinov

» Popular Pages

  • Tickers
  • Articles

May 25

The Thread Grows Larger as Needle Shrinks

May 25

Yahoo Finance: Dave Nadig Talks Alternative Allocations

May 25

ETF Leaders Powered by the NYSE: Gunjan Chauhan

May 25

Gold Could Reach $5,000 by 2030

May 25

SEC Considers Stricter ESG Disclosure Requirements

May 25

Best & Worst Monthly Performers: May 25 Edition

May 25

Canterbury: May Market Video

May 25

Ethereum's Long-Term Allure Is Evident

May 25

Insurers Own More ETFs Than You Think

May 25

Focus on FMET for Metaverse Equity Bargains

QQQ

Invesco QQQ Trust

SPY

SPDR S&P 500 ETF Trust

VOO

Vanguard S&P 500 ETF

ARKK

ARK Innovation ETF

XLE

Energy Select Sector SPDR...

DBA

Invesco DB Agriculture Fund

VTI

Vanguard Total Stock Market...

VGT

Vanguard Information...

WEAT

Teucrium Wheat Fund

SCHD

Schwab US Dividend Equity ETF...


Content continues below advertisement

Loading Articles...
Help & Info
  • Contact Us
  • Mission Statement
  • Press
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © ETF Flows LLC
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

Equity ETF Channel

Retirement Portfolio Redux: Is the 60%-40% Portfolio Dead?

Debbie CarlsonOct 22, 2020
2020-10-22

With the 10-year U.S. Treasury yield hovering below 1% and Federal Reserve Chairman Jerome Powell...

Equity ETF Channel

Portfolio Diversification Isn't Dead, It Was Just Sleeping

Debbie CarlsonOct 15, 2020
2020-10-15

Investors could be forgiven to think there was no reason to invest outside of the U.S. for the...

}
X