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