NewsEdge Trading Catalysts
Five strategies to trade news catalysts with NewsEdge. Each uses impact levels and news type presets to find setups before the crowd.
1. Earnings Plays#
Strategy#
Trade earnings beats, misses, and neutral reactions. Use the Earnings Focus preset and High impact filter.
Approaches#
| Approach | Setup | Action |
|---|---|---|
| Beat | Beat + raise = bullish | Buy calls or stock |
| Miss | Miss + cut = bearish | Buy puts |
| Neutral | In-line + hold = range | Sell premium (iron condor, strangle) |
Execution#
- Pre-earnings: Set NewsEdge to Earnings Focus, watch for your ticker
- Post-release: Alert hits - check beat/miss/miss magnitude
- Entry: Within 5-10 minutes of release. Options often move 30-50% on 5% stock move
- Exit: Same day for day trades; 1-3 days for swing
Risk#
- Gaps can reverse. Use stops.
- IV crush after earnings. Sell premium, don't buy long-dated premium into earnings.
2. FDA Approval Plays#
Strategy#
Trade FDA approvals (buy calls) and rejections (buy puts). Stock moves 20-50% on binary events.
Setup#
- Approval: Buy calls. Stock gaps up 20-50%
- Rejection: Buy puts. Stock gaps down 20-50%
Execution#
- Pre-FDA: Use Biotech Catalyst preset, filter by ticker
- Alert: Approval or rejection hits
- Entry: Within 30 seconds if possible. Move is fast
- Target: 30-50% on options. Exit same day or next day
Risk#
- Binary outcomes. Wrong direction = large loss.
- Size small. One trade = 1-2% of account.
3. Analyst Upgrade Plays#
Strategy#
Trade the direction of analyst upgrades and downgrades. Typical 2-5% stock moves.
Setup#
- Upgrade: Buy calls or stock
- Downgrade: Buy puts or short
Execution#
- Filter: Analyst Activity preset, Medium impact
- Alert: Upgrade or downgrade on watchlist ticker
- Confirm: Check OptionFlow or Snapshot for flow confirmation
- Entry: Within 1-2 hours. Move can extend over days
- Target: 2-5% stock moves.
Risk#
- Single analyst = noise. Multiple upgrades = stronger signal.
- Downgrades can be sharp. Use stops.
4. Corporate Action Arbitrage#
Strategy#
Trade M&A, stock splits, dividends. Event-driven, often predictable.
Setup#
- M&A: Acquirer often dips; target often pops. Trade spreads or single leg
- Splits: Pre-split run-up common. Post-split often consolidates
- Dividends: Ex-div date plays, dividend capture
Execution#
- Filter: Corporate Actions preset
| Event | Typical Move | Action |
|---|---|---|
| M&A announced | Target +20-50% | Buy target calls |
| M&A deal break | Target -20%+ | Buy target puts |
| Split announced | +5-15% run-up | Buy calls pre-split |
Risk#
- Arbitrage is crowded. Edge is in speed and timing.
- Deal break risk on M&A. Size accordingly.
5. Market-Moving News Scalping#
Strategy#
Act within 30 seconds of High-impact news. Tight stops, 30-50% target, exit within hours.
Setup#
- Filter: Market Moving or High impact only
- Real-time: Enable 20-second refresh
- Stops: 20-30% below entry
- Target: 30-50% on options
Execution#
- NewsEdge alert - High impact
- Confirm direction (beat = up, miss = down, etc.)
- Check chart - not already extended
- Enter within 30 seconds
- Set stop at 20-30% below entry
- Target 30-50% or exit within 2-4 hours
Risk#
- Speed is critical. Delayed entry = reduced edge.
- Slippage on fast moves. Use limit orders.
- One bad trade can wipe a day. Strict position sizing.
Quick Reference#
| Strategy | Preset | Impact | Timeframe |
|---|---|---|---|
| Earnings | Earnings Focus | High | Same day |
| FDA | Biotech Catalyst | High | Same day |
| Analyst | Analyst Activity | Medium | 1-3 days |
| Corporate | Corporate Actions | High/Medium | Days to weeks |
| Scalping | Market Moving | High | Hours |
Next Steps#
- Quick Start - Get started with NewsEdge
- Impact Levels - Deep dive on High, Medium, Low