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Ride-the-Wave Strategy – Best for Stock Traders

Ride-the-Wave targets multi-day price momentum following a company’s earnings announcement (EA). With this strategy:

  1. Buy a stock one day post-EA if a stock reacts positively post-earnings:
    1. Near the close of trading the EA-day for a pre-market-EA
    2. Near the close of the following day for a post-market-EA
  2. Sell-to-close after 7-10 days, or possibly earlier if a desired price target is reached

Similarly,

  1. short a stock one day post-EA if a stock reacts negatively post-earnings:
    1. near the close of trading the EA-day for a premarket-EA
    2. near the close of the following day for a post-market-EA
  2. then buy-to-close after 7-10 days, or possibly earlier if a desired price target is reached

Important: Ride-the-Wave is predicated on significant price momentum triggered by an EA. The 7-10 day scenario is the maximum trade hold-time. If you see post EA-momentum is halted or reversed by a significant opposite move, re-evaluate your presence in the trade.

This popular StockEarnings screen below will give you a list of stocks that historically exhibit significant price momentum following an EA for the next seven days:

  1. Stocks exhibiting positive post-EA price moves are buy-candidates
  2. Stocks exhibiting negative post-EA price moves are sell/short-candidates

The screen includes those stocks whose Earnings just came out in last two days.

Screen criteria:

  1. Earnings Date Start Date : Current Date + -1 Day
  2. Earnings Date End Date : Current Date + -2 Days
  3. Predicted Move (Next Day) Max : 7%
  4. Predicted Move (On 7th Day) Min : 7%

Strategy Guideline:

  1. Buy the stock if stock has reacted positively. Short the stock if stock has reacted negatively (see above).
  2. Close the position in 7-10 days, or possibly earlier based on price move.

Volatility Crush Strategy - Best for Options Traders

The Volatility Crush strategy is used with stocks that typically experience relatively low-to-moderate price moves (≤4%) following their Earnings Announcements (EA). The basic trade idea is to sell put or call options right before the EA, collecting a credit when options premium is very high due to elevated implied volatility (IV). You then close the position right after the EA by buying the option back much cheaper due to the significant drop in IV that occurs after the mystery of the EA disappears. In assessing this trade, you need to do your homework to ensure you collect sufficient premium to make the trade worthwhile.

This trade is practical due to the low-to-moderate price-move after the EA, which generally won’t significantly affect the options price, unlike an “action” stock, which experience great price moves post-EA. With these symbols, if you’re on the right side of the price move, that’s a great thing. But if you’re on the wrong side of the move, not so great. Consequently, by minimizing the effect of the post-EA price move, you have a much better chance to profit from the reduction in IV without it being ruined by a violent price move.

For this trade, open the position either (1) the night before the EA when the company announces earnings or (2) during the EA day when it announces post-market, generally capturing IV at or close to its peak.

For this trade, open the position either (1) the night before the EA when the company announces earnings or (2) during the EA day when it announces post-market, generally capturing IV at or close to its peak.

This popular stockearnings screen will give you a list of stocks which do not react more than 4% fpost-EA. It includes only those stocks whose earnings are releasing next day.

Screen criteria:

  1. Earnings Date Start Date : Current Date + 1
  2. Earnings Date End Date : Current Date + 1
  3. Predicted Move (Next Day) Max : 4%
  4. Options Type: Weekly

Strategy Guideline:

  1. Options Strategy: Sell Call and Put
  2. Options Strike Price: Current Stock Price – (% Predicated Move x 2)
  3. Expiration Date: It should generally be the closest expiry immediately after the EA.
  4. Buy Insurance: Buying back Call and Put at Strike price which 10% lower than Sell Strike Price is optional but recommended.

Watch Video for More Detail

Volatility Rush Strategy - Best for Options Traders

The Volatility Rush takes advantage of increasing options premiums into earnings announcements (EA) caused by an anticipated rise in Implied Volatility (IV). With this strategy, Buy a Call and Put at-the-money (a long straddle) 2-3 weeks before the EA when IV is lower. Sell the position either (1) the night before the EA when the company announces earnings pre-market, or (2) during the EA day when it announces post-market, generally capturing IV at or close to its peak.

This popular screen will give you a list of stocks whose Options premiums tend to rise into Earnings. It includes only those stocks whose Earnings are at least two weeks away from today.

Screen criteria:

  1. Earnings Date Start Date : Current Date + 15 Days
  2. Earnings Date End Date : Current Date + 30 Days
  3. Predicted Move (Next Day) Min : 5%
  4. Options Type: Weekly or Monthly if that lines up with the two to three-week lead-time for entering the trade

Strategy Guideline:

  1. Buy a Straddle at or close to the money two to three weeks pre-EA.
  2. Sell the position either the night before the EA when the company announces earnings pre-market, or during the EA day when it announces post-market.
  3. Expiration date should generally be the closest expiry immediately after the EA.
  4. Straddle price should not be more 60% of predicted move.

Since Last Earnings

Change in share price since last Earnings release.

Why is it Important?

When share has gained more than 10% since it's last Earning release, it tends to over react to minor bad news and give up some gains if not all. So, it contains more downside volatility than upside When share has dropped more than 10% since it's last Earning release, it tends to over react to minor good news and recover some drops if not all. So, it contains more upside volatility than downside.

EPS Surprise (%)

Occurs when a company's reported quarterly or annual profits are above or below analysts' expectations. Here is the formula to derive % EPS Surprice:

Actual EPS - Estimated EPS
------------------------------------- x 100
Estimated EPS

Why is it Important?

Earnings surprises can have a huge impact on a company's stock price. Several studies suggest that positive earnings surprises not only lead to an immediate hike in a stock's price, but also to a gradual increase over time. Hence, it's not surprising that some companies are known for routinely beating earning projections. A negative earnings surprise will usually result in a decline in share price.

Next Day Price Change (%)

Next Regular trading session Closing price following Earnings result.

For After Market Close Earnings, It is a next trading day closing price. For Before Market Open Earnings, It is the same trading day closing price.

Why is it Important?

Next Day price change is a reaction of Earnings result.

Stock Trade Alerts (1-Day Hold)

Our proprietary algorithm predicts directional stock movement in Earnings reactions. In other words, it suggests whether the stock will go UP or DOWN in the next regular trading session in Earnings reactions. It has a only one day holding period so your money does not stuck.

Here’s how you trade the 1-Day Hold Stock Trade Alerts:

  1. Open the position before earnings are announced
  2. Hold the position through the earnings announcement
  3. Close the position after the earnings announcement

One thing to keep in mind is that you will experience significant volatility trading the 1-Day Hold Alerts. One trade can generate a 10% return…yet at the same time, one trade can cost you 10%.

But over time, this strategy has proven to be a consistent winner for us (we’ve generated over 249% returns with it over the last 12 quarters). Click here to view Backtesting results 1-Day Hold Strategy.

We sugggest developing confidence in this strategy by paper-trading it for sometime before investing real money.

READ BELOW ON HOW TO USE 1-DAY HOLD STOCK ALERTS

  • -Stock Symbol represents the company you want to go long or short on
  • -Trade Open Date is the specific day and time to enter the trade
  • -Trade Close Date is the specific day and time to exit the trade
  • -Trade Action tells you to buy (which is going long the stock). Sell short is to enter a short position in the stock.
  • -Next Day Volatility Prediction represents our predicted volatility in the stock during 1-day holding period. So we exactly know what we are getting into it.

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Symbol/Company Trade Open Date Time Trade Close Date Time Trade Action Next Day Volatility Prediction
Symbol/Company Trade Open Date Time Trade Close Date Time Predicted Trade Action Profit (%)

Frequently Asked Questions

How do I get started with 1-Day Hold Stock Trade Alert?

You should trade with paper money for at least one quarter to understand how 1-Day Hold Stock Trade Alert work. You should trade small with each 1-day hold Stock Trade Alert in a very consistent manner. You should NEVER trade too much with few 1-Day Hold Stock Trade Alert (don't be greedy) and should not randomly trade 1-Day Hold Stock Trade Alert (don't be inconsistent). You MUST do your own research before trading with 1-Day Hold Stock Trade Alert.

When buying the original position, should we buy at 3:59pm EST or try to purchase during the day when prices may be lower (such as at lunch time or a time determined by the chart)?

We have performed backtesting on buying a position at 3:59pm EST for over 30 quarters. It works well. That's why we are recommending it. But if you can find a lower price at middle of the day or a favorable price determined by the chart, you should go for that.

Do you predict on all US and Canada stocks for 1-Day Hold Stock Trade Alert?

Currently, we cover about 250 stocks for 1-Day Stock Trade Alert strategy.

How many predictions do you post at a time for 1-day hold Stock Trade Alert?

At a time, we post maximum 20 predictions for 1-day hold Stock Trade Alert. So, we suggest you to visit Prediction page every day.

What factors do you use for 1-day Stock Trade Alert?

First, we look over 40 parameters related to companies Earnings by using our AI algorithm. Then manually, we perform a great amount of analysis on small details. So, our prediction is derived from the combination of both human work and technology.

Do you have any backtesting or past performance data for 1-day Stock Trade Alert?

Yes! we do. We have backtesting data for more than 12 historical quarters as well as current quarter's already released predictions. Check out our BACKTESTING Stock Trade Alert (Past Performance)

Currently I only see few stocks in the 1-Day Hold Stock Trade Alert page. How often do you update it?

You will see less predictions in off-Earnings season and more predictions during Earnings season. As companies confirm Earnings Date, we post them.

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