Many options traders like to trade the news for quick profits. Can news releases be dependable to trade? First, let’s take a look at the significance of the news being released.

Major news report like GDP, CPI, Interest rates or Unemployment can absolutely cause a stir in the markets. The question is that you have no idea whether it is going to go up or down. Trading the news is the same as playing earnings gapping, you are guessing and that is gambling.

I would like to emphasize this again, as an options trader, it is crucial to understand about volatility. Any news that can cause the market to move will cause the markets volatility to increase at the same time. An increase in volatility means increase in fear which in turn means an increase in options premium.

The markets volatility would be so crazy that it would be dangerous to trade options. What has been affecting the market lately? Almost every major news or events has an effect on it and the market reactions are purely based on the masses psychology.

Very often, when we listen to the news, there are given by these so called ‘experts’ with questionable credentials, or limited resources. It could be that an inexperienced junior staff who is providing the piece of information.

Communications between news sources and brokerage houses are completely unregulated and unsupervised, therefore allowing the possibility of the news being diluted or altered and usually released to the public later in time.

However there are many who are willing to pay top dollars to get access to the news first. Use your intelligence, if the big boys would want to sell, they will tell you to buy and vice versa.

“The greater the uncertainty, the more people are influenced by the market trends; and the greater the influence of trend following speculation, the more uncertain the situation becomes” – George Soros

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