ajax loader

Loading...


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 Earnings News | Investor Financial Market News

Olive Garden parent Darden Restaurants reports mixed financial results before the bell.

CNBC Tue, 18 Dec 2018 12:19 GMT

Truck maker Navistar on Tuesday reported better-than-expected quarterly profit and revenue, as strong freight demand helped boost sales of its high-margin Class 8 heavy trucks.

CNBC Tue, 18 Dec 2018 12:13 GMT

CEO Douglas Yearley says reports about the souring house market are causing the slowdown.

CNBC Tue, 04 Dec 2018 13:26 GMT

Dollar General on Tuesday lowered its full-year profit and sales forecast, hit by higher costs related to hurricanes in the third-quarter and higher freight costs, sending its shares down 6 percent before the bell.

CNBC Tue, 04 Dec 2018 12:48 GMT

U.S. luxury home builder Toll Brothers said on Tuesday its quarterly profit rose 62.1 percent, as it sold more homes at higher prices.

CNBC Tue, 04 Dec 2018 10:19 GMT

Cloud storage provider Box reported a smaller-than-expected quarterly loss as it added more customers, and forecast full-year revenue estimates above analysts' estimates.

CNBC Thu, 29 Nov 2018 10:58 GMT

Tiffany's stock nose-dives after the jeweler released disappointing third-quarter sales that were hurt by weaker spending from Chinese tourists in the U.S. and Hong Kong.

CNBC Wed, 28 Nov 2018 13:54 GMT

Jim Cramer hears from Salesforce.com CEO Marc Benioff after the software giant's third-quarter earnings report.

CNBC Tue, 27 Nov 2018 22:15 GMT

A boost in construction equipment sales drove profit higher for Deere in the fourth quarter, but the results fell short of Wall Street expectations and pulled on shares before the opening bell Wednesday.

CNBC Wed, 21 Nov 2018 14:35 GMT

Gap reported quarterly same-store sales below analysts' estimates on Tuesday, dragged down by another weak performance in its namesake brand.

CNBC Wed, 21 Nov 2018 10:55 GMT

Campbell Soup reports quarterly earnings and revenue that beat analysts' expectations. The soup company is locked in a proxy fight with activist firm Third Point.

CNBC Tue, 20 Nov 2018 12:59 GMT

Kohl's reports quarterly earnings and revenue that topped analysts' expectations. While it also raised its profit forecast for the year, it was on the low end of what Wall Street had been calling for, and shares plunge.

CNBC Tue, 20 Nov 2018 12:37 GMT

Medical device maker Medtronic reported a 6 percent rise in quarterly revenue on Tuesday, helped by higher sales in its cardiac and vascular business.

CNBC Tue, 20 Nov 2018 12:03 GMT

Lowe's reports quarterly earnings and revenue that beat expectations, though same-store sales were softer than anticipated and the company lowers its full-year estimates.

CNBC Tue, 20 Nov 2018 11:03 GMT

Target's investments in its supply chain weighed on profits, but the retailer says it's now "better positioned for this holiday season than ever before."

CNBC Tue, 20 Nov 2018 10:58 GMT

The company, known for its brands Victoria's Secret and Bath & Body Works, beat profit expectations.

CNBC Mon, 19 Nov 2018 22:20 GMT

Chinese e-commerce firm JD.com's shares came under further pressure on Monday after the company reported its slowest quarterly revenue growth since its initial public offering in 2014.

CNBC Mon, 19 Nov 2018 13:20 GMT

J.C. Penney in October filled its vacant CEO role with Jill Soltau, former CEO of Joann Stores. Soltau came after a string of executive departures, including former J.C. Penney CEO Marvin Ellison and CFO Jeffrey Davis.

CNBC Thu, 15 Nov 2018 13:06 GMT

Walmart has been making investments in its stores, online and internationally to keep pace with arguably its biggest rival of all, Amazon.

CNBC Thu, 15 Nov 2018 10:58 GMT

Cisco beat expectations for the fiscal first quarter and met expectations for the next quarter.

CNBC Wed, 14 Nov 2018 21:16 GMT

Uber's losses have ticked up and growth has slowed from last quarter, according to the company's self-reported financials.

CNBC Wed, 14 Nov 2018 21:00 GMT

Macy's has been testing new technology and other concepts like mini marketplaces in stores to lure shoppers and grow sales.

CNBC Wed, 14 Nov 2018 12:30 GMT

Maersk said the effect of trade tensions could reduce global container trade between 0.5 and 2 percent during 2019 and 2020.

CNBC Wed, 14 Nov 2018 08:17 GMT

Blue Apron will reduce its workforce by 4 percent as the company aims to become profitable in 2019, the meal kit company announced Tuesday.

CNBC Tue, 13 Nov 2018 21:55 GMT

Marijuana producer Tilray reported quarterly earnings that beat analysts' expectations on Tuesday, though total revenues fell just shy of estimates.

CNBC Tue, 13 Nov 2018 21:25 GMT

Tuesday marks the company's first earnings report since debuting on the Nasdaq in October.

CNBC Tue, 13 Nov 2018 21:10 GMT

Susquehanna's Christopher Rolland upgraded Nvidia to positive from neutral even though he said the 'odds of a guidance miss are high' when the chipmaker reports earnings Thursday after the bell.

CNBC Tue, 13 Nov 2018 12:44 GMT

Bayer's adjusted core earnings were flat for the quarter, as better prescription numbers for cardiovascular drug Xarelto were tempered by a weaker animal health business and a strong euro weighing on the value of overseas sales.

CNBC Tue, 13 Nov 2018 11:28 GMT

Home Depot reports quarterly earnings that beat analysts' expectations and raises its sales outlook for the full year.

CNBC Tue, 13 Nov 2018 10:28 GMT

Though analysts are impressed with Disney's studio revenue, which grew 50 percent from the prior year, many focus on its new over-the-top strategy known as Disney+.

CNBC Fri, 09 Nov 2018 13:38 GMT

Bristol-Myers Squibb Co received an offer from Japanese healthcare firm Taisho Pharmaceutical Holdings Co Ltd to buy the company's French over-the-counter drugs business UPSA for $1.6 billion, the companies said on Wednesday.

recent news recent news recent news
recent news

Reuters Wed, 19 Dec 2018 04:39:04 -0500

Airfares in the fast-growing Indian market are 10 to 15 percent lower than breakeven levels for airlines, a Boeing Co executive said, as the planemaker raised its long-term jet order forecast for the nation to a record despite market challenges.

recent news recent news recent news
recent news

Reuters Wed, 19 Dec 2018 04:29:07 -0500

Estonia has made the first arrests in a money laundering scandal involving Denmark's Danske Bank , detaining 10 former employees at the bank's Estonian branch, the state prosecutor said Wednesday.

recent news recent news recent news
recent news

Reuters Wed, 19 Dec 2018 04:22:18 -0500

GlaxoSmithKline plans to split into two businesses -- one for prescription drugs and vaccines, the other for over-the-counter products -- after forming a new joint venture with Pfizer's consumer health division.

recent news recent news recent news
recent news

Reuters Wed, 19 Dec 2018 04:14:07 -0500

A very cautious optimism remains among Asian companies in the fourth quarter as they wait to see whether there will be any breakthrough in a trade dispute between the United States and China, a Thomson Reuters/INSEAD survey showed.

recent news recent news recent news
recent news

Reuters Wed, 19 Dec 2018 04:11:56 -0500

Oil stabilized on Wednesday after one of its biggest falls for years, but remained under pressure from oversupply and concern that a slowing global economy would depress demand for fuel.

recent news recent news recent news
recent news

Reuters Wed, 19 Dec 2018 04:04:15 -0500

Italy's Transport Minister Danilo Toninelli said on Wednesday that he would like to revoke motorway concessions held by Autostrade per l'Italia after the collapse of a bridge in Genoa last August.

recent news recent news recent news
recent news

Reuters Wed, 19 Dec 2018 03:26:22 -0500

Drug inspectors have seized samples of Johnson & Johnson Baby Powder from a factory in northern India, an industry source said on Wednesday, following a Reuters report that the firm knew for decades that cancer-causing asbestos lurked in the product.

recent news recent news recent news
recent news

Reuters Wed, 19 Dec 2018 03:11:25 -0500

The U.S. Federal Reserve is expected to raise interest rates on Wednesday, but may cut the number of hikes it anticipates next year and signal an earlier end to its monetary tightening in the face of financial market volatility and rising recession fears.

recent news recent news recent news
recent news

Reuters Wed, 19 Dec 2018 02:31:54 -0500

Asian share markets played second string to bonds on Wednesday as a spectacular fall in the price of oil spurred speculation the U.S. Federal Reserve might be done with tightening after its policy meeting later in the session.

recent news recent news recent news
recent news

Reuters Wed, 19 Dec 2018 02:30:50 -0500

India's federal drug regulator will on Wednesday seize samples of Johnson & Johnson's baby powder for testing, local media said, following a Reuters report that the company knew for decades that cancer-causing asbestos lurked in the product.

recent news recent news recent news
recent news

Reuters Wed, 19 Dec 2018 01:52:33 -0500

SoftBank Corp shares tumbled more than 14 percent on debut, as investor appetite for Japan's biggest ever IPO was hurt by a recent service outage at the telecoms operator and worries over its exposure to Chinese telecoms gear maker Huawei.

recent news recent news recent news
recent news

Reuters Wed, 19 Dec 2018 01:27:28 -0500

Billionaire entrepreneur Elon Musk made a brief public appearance late on Tuesday to unveil the first tunnel completed by the underground transit venture he launched two years ago as an ambitious remedy to Los Angeles' infamously heavy traffic.

recent news recent news recent news
recent news

Reuters Wed, 19 Dec 2018 00:58:17 -0500

Shareholders voted against the executive remuneration plans of two of Australia's biggest banks on Wednesday following misconduct revelations that have swept through the country's financial sector.

recent news recent news recent news
recent news

Reuters Tue, 18 Dec 2018 23:26:55 -0500

U.S. chipmaker Micron Technology Inc gave on Tuesday quarterly sales and profit forecasts well below Wall Street estimates, citing a market glut of memory chips as consumer and business demand for phones and computers is weakening.

recent news recent news recent news
recent news

Reuters Tue, 18 Dec 2018 22:51:25 -0500

Bankrupt U.S. retailer Sears Holdings Corp will take a charge of about $443 million arising from store closures, a regulatory filing showed on Tuesday.

recent news recent news recent news
recent news

Reuters Tue, 18 Dec 2018 20:39:45 -0500

Oil prices tumbled more than 5 percent on Tuesday in heavy trade due to fears of oversupply and deteriorating demand, extending a selloff that has taken major crude benchmarks down more than 30 percent from an October peak.

recent news recent news recent news
recent news

Reuters Tue, 18 Dec 2018 20:29:23 -0500

FedEx Corp on Tuesday slashed its 2019 forecast after Europe's economy weakened and the U.S. trade row exacerbated a slowdown in China, sending shares in the package delivery company tumbling more than 6 percent after the closing bell.

recent news recent news recent news
recent news

Reuters Tue, 18 Dec 2018 20:00:33 -0500

Britain risks driving banks overseas if current high levels of taxation on the industry are maintained after Brexit, a bank lobby group said on Wednesday.

recent news recent news recent news
recent news

Reuters Tue, 18 Dec 2018 19:10:00 -0500

The benchmark S&P 500 stock index ended little changed in a choppy trading session on Tuesday as the possibility of a partial U.S. government shutdown raised investor jitters ahead of a highly anticipated meeting of the Federal Reserve.

recent news recent news recent news
recent news

Reuters Tue, 18 Dec 2018 18:10:04 -0500

Join over 30,000 investors who get daily notable Earnings alerts with predicted move.