8:35am (EST)

I posted a little early this morning as I was anxious to get the morning outlook as soon as the jobs report was released. Heading into the announcement this morning, market futures were lower. Ahead of the report, Dow futures were coming off their lows and were down 7. As soon as the numbers were released, they soared. Up 30 and then 50 to 60 within a minute.

The Labor Department’s report was expected to show job losses were improving and it did. Wall Street had expected a number of around 320,000. We got 240,000. Pretty good. The surprising number helped the futures, no doubt, as it was the best monthly number since August of 2008.

The slowdown in job cuts comes as companies are likely done with their largest cost-cutting initiatives that have helped offset sagging sales and slipping revenues. Should be an interesting open…

Sometimes the best trades are the ones you talk yourself out of. Earnings season is tricky and we have done well with a number of trades recently and have avoided the traps that most novice option traders make when earnings season rolls around. Each option trade is unique in itself and one of my first thoughts with Nvidia (NVDA, $13.12, down $0.28) was their upcoming earnings announcement.

It is hard to get “excited” about a company that is expected to report a loss which is what Nvidia reported after yesterday’s close but there was an opportunity for a trade before the announcement which is what we did. The August 13 calls (UVAHM, $0.75, down $0.30) were profiled at 80 cents and most of you got out around $1.00. See how the options fell going into yesterday’s close?

In after-hours last night, the stock was up $1.18 to $14.30. This morning, the stock is trading at $14.10. The calls should open around $1.25 if that price holds. Don’t open new positions, I was just teaching the newbies how options and earnings work. It is an unpredictable game which is why we do a lot of in-and-out trades. We are winding down our positions and it looks like we are headed higher at the open.

Rick Rouse
Rick@MomentumOptionsTrading.com