A Smart Bet On Adobe Stock Ahead Of Earnings?
Let's get right to it: Buying 2% out of the money put options one day before Adobe's earnings might not be a bad trade.
While these are short-term opportunities that emerge from time to time, real wealth is created by compounding money over the long-term. That's exactly what the Trefis High Quality (HQ) Portfolio is designed for, and has returned >91% since inception, outperforming S&P 500, Dow, and Nasdaq, all of them.
Let's dig into details of what makes the Adobe trade worth your attention.
Over the past 5 years, Adobe has reported 20 earnings. What happened next?
High likelihood of dropping combined with high magnitude of drop when it happens - that's where the value is!
That's a pretty clear historical skew: Adobe's earnings tend to disappoint the market - or at least trigger short-term selling pressure more often than not.
Let's break the trade down with a concrete scenario:
In short: Limited downside, meaningful upside. And that's the essence of why this trade stands out: You're leveraging historical probability, tapping into short-term volatility, and doing so with defined risk.
Let's be clear: This is not a sure thing.
But here's the key: The potential loss is small and known. The upside, if history rhymes, could be substantial.
That's a classic asymmetric bet. You don't need to be right all the time. You just need to be right some of the time - and right big.
The win rate historically favors a drop.
If you're comfortable with short-term options trading and want to play the odds, Adobe's earnings on June 12 may be worth circling on your calendar. Historical data, skewed returns, and attractive option pricing combine to create a rare risk-reward opportunity.
Just remember: trade small, stay smart, and know what you're risking. Adobe's historical post-earnings reaction is an example of short-term volatility in the market, which is not uncommon, and is often challenging to navigate. However, long-term outperformance is hopefully what matters to you. If so, consider investing in the Trefis High Quality (HQ) Portfolio, which, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.
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