Markets Live Recap: Our Experts Cover Oil, Earnings, and How to Trade Options

The Dow fell another 630 points today after another oil plunge - but this time that focus was on the June 2020 contracts.

Yesterday, the May 2020 contracts fell as far as negative $40. Today, they were up to a positive $9.

But the June contracts fell 36% to $13 today as investors are beginning to realize that the "new normal" is likely lower oil prices for longer as Saudi Arabia and Russia aggressively try to drive U.S. producers out of business.

In addition to oil, earnings were in focus today.

Here's what our experts - Chris Johnson, Tom Gentile, D.R. Barton, Jr., and Shah Gilani - saw in the oil markets, and what they think about upcoming earnings and how to profit off implied options volatility in any market.

Chris Johnson (8:45 a.m. EDT)

  • Chris explained why oil dropped below $0.00 yesterday:
    • Essentially, focus on the massive oversupply in oil caused a huge sell-off for the May 2020 contracts.
    • Now, Chris expects the June 2020 contracts to also start to see heavy selling. And he thinks investors can win with short-term bearish oil trades in refineries and exploration companies.
  • Here are two oil stocks that Chris is currently bearish on:
    • ExxonMobil Corp. (NYSE: XOM)
    • Petroleo Brasileiro SA Petrobras (NYSE: PBR)

Tom Gentile (11 a.m. EDT)

  • Tom focused on predictable earnings patterns for some of the hottest stocks in today's market:
    • Netflix Inc. (NASDAQ: NFLX) - Tom acknowledged Wall Street's expected strength headed into earnings, but implied volatility is making the options too expensive to buy right now. Look to trade the stock after it reports.
    • com Inc. (NASDAQ: AMZN) - Tom used his proprietary software on to show that Amazon typically rises after it reports earnings. And he thinks the company's next report will be no different.
  • Tomorrow, Tom will be applying his "rules-based trading system" to fast food chains, including:
    • Yum! Brands Inc. (NYSE: YUM) - reports April 29.
    • McDonald's Corp. (NYSE: MCD) - reports April 30.

D.R. Barton, Jr. (1:30 p.m. EDT)

  • D.R. taught his viewers the three best ways to play earnings. Here they are:
    • Play the implied volatility increase into earnings - buy an options spread so you can negate the price movement and only trade the volatility up into earnings.
    • Play the big move through the options announcement by buying calls or puts ahead of the earnings announcement. This is the riskiest way to play earnings, but it can deliver the most rewards. The key to this is how much time you want to buy an option in advance for.
    • Play the reaction the day after the company's earnings report. This is D.R.'s favorite way to play earnings because we already know the earnings number and have a higher probability for success since we can likely predict the next move in the stock.
  • Tune in tomorrow to learn more about D.R.'s three options trading strategies so you can apply them while trading in and out of this earnings season.

Shah Gilani (3:45 p.m. EDT)

  • Shah expects the new jobless claims number on Thursday to be bad - likely another 5 million to 6 million jobs loss, bringing the total to 27 million Americans.
  • He thinks the market will retest recent lows and possibly go even lower in the coming weeks as earnings season continues to disappoint.
    • Shah is targeting 22,000 for the Dow Jones Industrial Average.
  • Shah is accumulating a position in oil for the long term.
  • And last, Shah is bullish on gold because he thinks investors will view this as a flight to safety and stability as businesses are unable to produce profits due to the quarantine.

Catch us tomorrow - starting LIVE again at 8:45 a.m. EDT with Chris Johnson, right here.

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