After Trade Review, and Earnings Mention Market Thoughts
In light of our rapidly growing subscriber base, we’re starting this week out with a free article containing an after trade review; and thoughts going forward trading earning mention markets. Our machine learning system was once again on the money with this trade:
It was a volatile market based in part on relatively low liquidity. We had a final dollar cost average of ~50 cents a “NO” contract. As we accurately predicted, Snapchat Family Center was NOT mentioned on SNAP’s earning call.
A couple considerations on why:
The news-cycle came and went, SNAP previously announced their improvements to the Family Center on the call prior.
The improvements were primarily focused around legal mitigations after a lawsuit. This is generally an ugly topic, and a topic management doesn’t want to bring back up once it’s been put to bed.
SNAP was more focused on pushing the growth narrative.
After a strong earnings beat, analysts are even less likely to waste their one question to ask about a lawsuit that has already been settled out and “priced-in” to the equity shares. If Family Center wasn’t mentioned in the prepared remarks the odds of them saying it in the Q&A are further reduced (virtually to zero.)
This presents an appealing live trade opportunity which is why you should be dialed into all earning calls you have a position on.
Looking forward at company earnings mention contracts
A pattern we’ve noticed is if a company has a top/bottom line miss, they are far more likely to heavily stress speaking about financial metrics in their prepared remarks. Even more so if the stock is aggressively selling off.
We believe this adds more weight to “NO” contracts around ‘fluff’ some recent examples:
Cane Sugar “NO” - not said on the Coke call after a sales miss.
Retro “NO” - also not said on the Coke call after a sales miss.
Given that earnings reports release roughly 30-60 minutes before the call this is basically a live trade. We will not be able to bake in this metric to our machine learning model. To avoid spamming your inbox before every earnings call if we spot something we’ll post it to either Substack Notes or our Twitter / X.
We’ve made improvements to our machine learning system
Our next market write up will include the new weights we’ve added to our machine learning algo. We’ve added overall call length to assign more weight to the YES side of trades taking into account longly winded CEOs like Elon Musk who are apt to ramble and subsequently hit more Ys
Limit Orders are Your Friend
Are you trading? Or are you gambling? You should strongly consider setting limit sells at a comfortable price target. Buying a 20c contract and selling back at 40c is a solid trade and represents a 100% percent ROI. Dumb money hits market orders, and rides out until resolution. Real traders close out their positions with a healthy ROI and avoid resolution risk. You can either trade outcomes, or probability flow. While you can be profitable in both, trading the waves of probability will make you more money in the long run.
Also be sure to check out Bernard B’s:
Up next
By the end of the week be prepared for another Kalshi earnings mention contract our machine learning model shows to be mispriced. Our next write up will include the added calculation of average call runtime. Paid subscribers will get access to additional social sentiment and weight added to the calculation based on the questions we predict wall street analysts will ask on the call.
Big W on family center