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

Altria shares slid more than 5% after the company missed first-quarter earnings, revenue expectations.

CNBC Thu, 25 Apr 2019 11:24 GMT

3M reports earnings and revenue that badly missed analysts' expectations and cut its full-year forecast.

CNBC Thu, 25 Apr 2019 10:52 GMT

Southwest said it lost more than $200 million in revenue during the quarter.

CNBC Thu, 25 Apr 2019 10:48 GMT

Closely watched data on new high-speed internet customers surpasses projections.

CNBC Thu, 25 Apr 2019 10:31 GMT

Chipotle Mexican Grill on Wednesday reported earnings and revenue that beat analysts' expectations after doubling its digital sales during the quarter.

CNBC Wed, 24 Apr 2019 19:30 GMT

Executives braced investors for another loss in the second quarter before returning to profitability in the second half of the year.

CNBC Wed, 24 Apr 2019 19:30 GMT

Microsoft kicked off tech earnings season and the stock jumped after revenue topped estimates.

CNBC Wed, 24 Apr 2019 19:30 GMT

Facebook said it took a one-time charge of $3 billion due to an ongoing Federal Trade Commission inquiry.

CNBC Wed, 24 Apr 2019 19:30 GMT

Anthem's first-quarter profit beat Wall Street estimates on Wednesday as it reined in expenses, and the U.S. health insurer raised its earnings forecast for the year.

CNBC Wed, 24 Apr 2019 12:29 GMT

With Facebook set to release quarterly results Wednesday afternoon, Wall Street wants to know how well the company is preparing to make money beyond ads.

CNBC Wed, 24 Apr 2019 12:00 GMT

Domino's Pizza reports quarterly earnings topped analysts' expectations but sales fell short.

CNBC Wed, 24 Apr 2019 11:40 GMT

Tesla investors await updates on service improvements, the Shanghai Gigafactory and Model 3 margins.

CNBC Wed, 24 Apr 2019 11:30 GMT

Caterpillar said it now expects full year profit per share between $12.06 and $13.06, citing a tax benefit of 31 cents per share.

CNBC Wed, 24 Apr 2019 11:12 GMT

Ned Davis Research's Ed Clissold sees the market grinding higher as more earnings reports beat analyst estimates.

CNBC Wed, 24 Apr 2019 11:09 GMT

Boeing will pause share buybacks and is withdrawing its 2019 financial forecast while it works through issues surrounding the 737 Max.

CNBC Wed, 24 Apr 2019 11:09 GMT

AT&T posted a surprise gain in first quarter net wireless subscribers who pay a monthly bill.

CNBC Wed, 24 Apr 2019 11:06 GMT

EBay reported first-quarter earnings of $518 million.

CNBC Wed, 24 Apr 2019 09:52 GMT

Snap shares soared in after-hours trading on Tuesday after the company lowered losses, beat on revenue and continued growing its user base.

CNBC Tue, 23 Apr 2019 19:34 GMT

Lockheed Martin first-quarter earnings are far above what Wall Street anticipated.

CNBC Tue, 23 Apr 2019 11:34 GMT

Trump, who previously called for a boycott against motorcycle company, said the EU tariffs have forced Harley to move jobs overseas.

CNBC Tue, 23 Apr 2019 11:21 GMT

Hasbro reported a surprise quarterly profit on Tuesday as the box-office success of Transformers movie spin-off "Bumblebee" charged sales of its action toys, putting the company's shares on track for their best day in more than two decades.

CNBC Tue, 23 Apr 2019 11:16 GMT

Coca-Cola beat Wall Street's estimates for its first-quarter earnings and revenue.

CNBC Tue, 23 Apr 2019 11:03 GMT

P&G is coming off a strong fiscal second quarter in which its bet on raising prices paid off, helping to drive sales past investors' expectations.

CNBC Tue, 23 Apr 2019 10:47 GMT

Twitter reports growth in its monetizable daily active users in its report for the first quarter of 2019.

CNBC Tue, 23 Apr 2019 10:31 GMT

This week is the busiest week of earnings, and Craig Johnson and Mark Tepper say Amazon is the name to watch ahead of earnings.

CNBC Mon, 22 Apr 2019 12:02 GMT

Halliburton called the bottom of a pricing downturn that has plagued oilfield services companies and surprised on expectations.

CNBC Mon, 22 Apr 2019 11:29 GMT

American Express on Thursday reported lower earnings in the first quarter but earnings per share beat estimates.

CNBC Thu, 18 Apr 2019 12:50 GMT

Pier 1 Imports' CFO Nancy Walsh is leaving after a year in the job at the struggling home furnishing retailer.

CNBC Thu, 18 Apr 2019 10:10 GMT

Unilever reported stronger than expected quarterly underlying sales growth.

CNBC Thu, 18 Apr 2019 08:26 GMT

Investors' biggest fear about the finance industry – that the big banks' main profit-making engine will sputter – is becoming apparent.

CNBC Wed, 17 Apr 2019 18:07 GMT

Goldman Sachs Group Inc is expanding a financial advisory service for top executives to target millions of other affluent employees at some of the biggest U.S. companies, as it seeks to build its retail and wealth management businesses.

recent news recent news recent news
recent news

Reuters Thu, 25 Apr 2019 13:45:59 -0400

United Parcel Service Inc said it saw signs of softening in the U.S. economy and issued a disappointing second-quarter profit forecast, sending shares down 7 percent even as it promised a strong end to the year.

recent news recent news recent news
recent news

Reuters Thu, 25 Apr 2019 13:33:58 -0400

The U.S. Federal Aviation Administration said Thursday it is inviting top civil aviation officials from around the world to a May 23 meeting to discuss the now-grounded Boeing 737 MAX.

recent news recent news recent news
recent news

Reuters Thu, 25 Apr 2019 13:30:36 -0400

The S&P 500 was flat on Thursday as gains in Facebook and Microsoft were overshadowed by 3M's bleak quarterly report, which sparked concerns about slowing global growth.

recent news recent news recent news
recent news

Reuters Thu, 25 Apr 2019 13:21:15 -0400

The United States on Thursday added China's third-largest e-commerce platform to its list of "notorious markets" for violations of intellectual property rights and kept China on its priority watch list for piracy and counterfeiting concerns.

recent news recent news recent news
recent news

Reuters Thu, 25 Apr 2019 13:02:02 -0400

Brent crude touched $75 per barrel on Thursday for the first time in nearly six months as quality concerns halted some Russian crude exports to Europe while the United States prepared to tighten sanctions on Iran.

recent news recent news recent news
recent news

Reuters Thu, 25 Apr 2019 12:43:56 -0400

After months of handwringing about the possible crash-landing of the housing market, investors awaiting quarterly earnings from No. 3 U.S. homebuilder PulteGroup Inc this week were ready for the worst.

recent news recent news recent news
recent news

Reuters Thu, 25 Apr 2019 12:40:40 -0400

China aims to make the Belt and Road initiative sustainable and prevent debt risks, its finance minister said on Thursday, seeking to allay criticism that the infrastructure plan to boost trade and investment creates a heavy burden for some nations.

recent news recent news recent news
recent news

Reuters Thu, 25 Apr 2019 12:37:20 -0400

Swedbank admitted to failings in combating money laundering on Thursday and said it was under investigation by multiple U.S. authorities, piling more pressure on the bank as it tries to rebuild its reputation.

recent news recent news recent news
recent news

Reuters Thu, 25 Apr 2019 12:36:09 -0400

Britain's competition regulator on Thursday blocked Sainsbury's proposed 7.3 billion pound ($9.4 billion) takeover of Walmart-owned Asda - a huge blow to the supermarket groups who wanted to combine to overtake market leader Tesco.

recent news recent news recent news
recent news

Reuters Thu, 25 Apr 2019 12:32:22 -0400

D.R. Horton Inc forecast 2019 revenue below Wall Street estimates and did not provide an outlook on gross margin for the year, spooking investors who have been worried about the impact of rising costs on future profits.

recent news recent news recent news
recent news

Reuters Thu, 25 Apr 2019 12:31:15 -0400

Shares of 3M Co fell 11 percent on Thursday after the U.S. manufacturing conglomerate cut its 2019 earnings forecast and said it would lay off 2,000 workers, citing worsening performance in high-growth markets such as China.

recent news recent news recent news
recent news

Reuters Thu, 25 Apr 2019 12:30:06 -0400

Chipotle Mexican Grill Inc said on Thursday it received another subpoena from U.S. federal prosecutors, seeking information related to an outbreak that left hundreds of people sick last year in one of its Ohio restaurant.

recent news recent news recent news
recent news

Reuters Thu, 25 Apr 2019 12:28:18 -0400

German hopes of creating a national banking champion able to challenge global competitors were dashed on Thursday when Deutsche Bank and Commerzbank ended merger talks due to the risks of doing a deal, restructuring costs and capital demands.

recent news recent news recent news
recent news

Reuters Thu, 25 Apr 2019 12:14:12 -0400

The collapse of merger talks between Commerzbank and Deutsche Bank is good news, a top Commerzbank shareholder said on Thursday, betting that the bank will seek an alternative deal with another European rival.

recent news recent news recent news
recent news

Reuters Thu, 25 Apr 2019 12:14:12 -0400

Deutsche Bank's chief executive Christian Sewing wants to be an active player in European banking consolidation, a German newspaper reported on Thursday.

recent news recent news recent news
recent news

Reuters Thu, 25 Apr 2019 12:13:05 -0400

Former Nissan Chairman Carlos Ghosn walked out of a Japanese jail for a second time late on Thursday, freed on $4.5 million bail after agreeing to curbs on contacting his wife as he awaits trial on financial misconduct charges.

recent news recent news recent news
recent news

Reuters Thu, 25 Apr 2019 12:11:05 -0400

Farm supplier CHS Inc has dozens of loaded barges trapped on the flood-swollen Mississippi River near St. Louis - about 500 miles from the company's two Minnesota distribution hubs.

recent news recent news recent news
recent news

Reuters Thu, 25 Apr 2019 12:07:50 -0400

Facebook Inc broke Canadian privacy laws when it collected the information of some 600,000 citizens, a top watchdog said on Thursday, pledging to seek a court order to force the social media giant to change its practices.

recent news recent news recent news
recent news

Reuters Thu, 25 Apr 2019 12:03:18 -0400

AbbVie Inc's better-than-expected quarterly profit and revenue and raised full-year earnings forecast failed to impress investors who focused on the uncertainty around its blockbuster drug Humira as it struggles against cheaper rivals.

recent news recent news recent news
recent news

Reuters Thu, 25 Apr 2019 11:56:38 -0400

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