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

Nike's momentum continues overseas, as it still looks for pockets of growth in North America, like women's apparel.

CNBC Thu, 21 Mar 2019 19:37 GMT

Shares of clothing company Guess tanked more than 12 percent after reporting earnings that missed analyst expectations.

CNBC Thu, 21 Mar 2019 12:29 GMT

Darden Restaurants, Olive Garden's parent company, reported earnings Thursday before the bell.

CNBC Thu, 21 Mar 2019 11:31 GMT

Micron Technology said it sees a recovery in the memory chip market coming and reported a quarterly profit that beat estimates as cost controls helped offset falling demand and prices.

CNBC Thu, 21 Mar 2019 10:45 GMT

Shares of semiconductors companies in South Korea soared during Thursday's trading session after earnings results from Micron.

CNBC Thu, 21 Mar 2019 05:07 GMT

Shares of General Mills jump 3.5 percent after the company reports an earnings beat.

CNBC Wed, 20 Mar 2019 12:36 GMT

Chinese streaming firm Tencent Music delivered its first earnings report as a public company, meeting market expectations but exposing soaring licence and content production costs.

CNBC Wed, 20 Mar 2019 10:21 GMT

BMW said it expected group pretax profit to fall by more than 10 percent in 2019 and announced a sweeping $13.6 billion cost savings and efficiency plan.

CNBC Wed, 20 Mar 2019 10:13 GMT

A top executive at FedEx is flagging serious concerns in the global economy.

CNBC Tue, 19 Mar 2019 20:34 GMT

FedEx issued weak full-year 2019 earnings guidance, the second time it has slashed its outlook since December.

CNBC Tue, 19 Mar 2019 19:53 GMT

Shares of Ulta Beauty rose following the release of the beauty company's better-than-expected fourth-quarter earnings.

CNBC Fri, 15 Mar 2019 09:48 GMT

Dollar General reported better-than-expected same-store sales on Thursday, as its customers spent more on groceries at the discount retailer's stores.

CNBC Thu, 14 Mar 2019 11:22 GMT

GE expects 2019 adjusted earnings between 50 cents and 60 cents a share, below the 70 cents a share Wall Street expected.

CNBC Thu, 14 Mar 2019 11:04 GMT

Cloudera fell sharply after reporting worse-than-expected earnings for its fiscal fourth quarter

CNBC Wed, 13 Mar 2019 22:05 GMT

The company saw a massive boon from revenue in its Atlas segment, its fully managed cloud database product.

CNBC Wed, 13 Mar 2019 20:56 GMT

Goldman's 12-month price target is $210, representing a 25 percent drop from here.

CNBC Wed, 13 Mar 2019 11:08 GMT

ADT reported a quarterly loss and forecast 2019 revenue below Wall Street estimates amid intensifying competition from fast-growing do-it-yourself home security offerings.

CNBC Tue, 12 Mar 2019 11:25 GMT

Shares of Stitch Fix soared as much as 20 percent in extended trading Monday following the release of the online personal styling company's strong second-quarter earnings.

CNBC Mon, 11 Mar 2019 20:26 GMT

The plunge marks a 40 percent drop from the stock's all-time high.

CNBC Fri, 08 Mar 2019 15:32 GMT

Costco Wholesale whizzed past analysts' estimates for quarterly profit as the warehouse club operator's margins were lifted by a drop in gas prices and a shift to lower-cost sourcing.

CNBC Fri, 08 Mar 2019 10:09 GMT

Shares of National Beverage Corp., the maker of popular seltzer water LaCroix, skidded 16 percent after the company blamed a drop in sales and profit on "injustice."

CNBC Thu, 07 Mar 2019 22:26 GMT

The company said it sees first-quarter revenue between $80 million and $84 million. That's far short of the $91 million analysts polled by Refinitiv had forecast.

CNBC Thu, 07 Mar 2019 21:15 GMT

Shares of Barnes & Noble fell more than 16 percent after the company reported fiscal third-quarter earnings Thursday that missed analysts' expectations.

CNBC Thu, 07 Mar 2019 14:08 GMT

Kroger reports earnings and revenue that fell short of analysts' expectations, sending its shares sharply lower.

CNBC Thu, 07 Mar 2019 12:59 GMT

American Eagle Outfitters forecast current-quarter profit below analysts' estimates on Wednesday as the apparel maker spends more on advertising and new Aerie store openings.

CNBC Thu, 07 Mar 2019 11:06 GMT

Exxon Mobil forecasts its earnings potential through 2025 is better than previously forecast, but also expects to increase capital spending.

CNBC Wed, 06 Mar 2019 14:00 GMT

Urban Outfitters said the year had started off weaker than expected, placing the blame on colder weather and "costly mistakes" in the spring fashion lines of its various brands.

CNBC Wed, 06 Mar 2019 11:33 GMT

Revlon shares plunged more than 18 percent Tuesday after new data showed a steep sales deceleration at the multinational cosmetics company.

CNBC Tue, 05 Mar 2019 16:17 GMT

Kohl's also announced on Tuesday it will be partnering with gym operator Planet Fitness at 10 locations across the country, promising more to come.

CNBC Tue, 05 Mar 2019 12:25 GMT

Target saw a surge of shoppers during the 2018 holidays, a sign that its investments in store remodels and delivery services are paying off.

CNBC Tue, 05 Mar 2019 11:32 GMT

Uber Technologies Inc and Pinterest, two of the highest profile internet companies planning to go public this year, have picked the New York Stock Exchange as the venue for their stock listings, according to sources familiar with the matter.

recent news recent news recent news
recent news

Reuters Thu, 21 Mar 2019 20:11:30 -0400

Investors are betting on heightened political uncertainty and greater volatility in European stock markets ahead of European Parliament elections in May amid growing concerns about rising populism.

recent news recent news recent news
recent news

Reuters Thu, 21 Mar 2019 20:10:22 -0400

Three in four Japanese companies expect U.S.-China trade frictions to last until at least late this year, a sharp contrast to market hopes that presidents Donald Trump and Xi Jinping might soon strike a deal to end their damaging trade war, a Reuters poll found.

recent news recent news recent news
recent news

Reuters Thu, 21 Mar 2019 19:16:33 -0400

Nike Inc reported quarterly revenue that failed to beat Wall Street estimates for the first time in over a year, as sales fell short of expectations in its biggest market of North America, sending its shares tumbling 5 percent on Thursday.

recent news recent news recent news
recent news

Reuters Thu, 21 Mar 2019 19:07:45 -0400

Investors in Hyundai Motor Group companies are due to meet on Friday to vote on U.S. hedge fund Elliott Management's demands for a massive special dividend and board makeover, in the latest case of shareholder activism in the Asian country.

recent news recent news recent news
recent news

Reuters Thu, 21 Mar 2019 19:01:46 -0400

A federal judge on Thursday rebuffed a request by hotel chains including Hyatt Hotels Corp, Marriott International Inc and Wyndham Hotel Group to throw out a class-action suit accusing them of conspiring not to compete with one another online.

recent news recent news recent news
recent news

Reuters Thu, 21 Mar 2019 18:56:07 -0400

Apple Inc is expected to launch an ambitious new entertainment and paid digital news service on Monday, as the iPhone maker pushes back against streaming video leader Netflix Inc. But it likely will not feature the New York Times Co.

recent news recent news recent news
recent news

Reuters Thu, 21 Mar 2019 18:54:29 -0400

Shares in Levi Strauss & Co surged 31 percent in their debut on Thursday, giving the jeans maker a market value of $8.7 billion and suggesting strong investor appetite before much-awaited listings from Lyft and Uber.

recent news recent news recent news
recent news

Reuters Thu, 21 Mar 2019 18:31:56 -0400

Boeing Co plans to offer as standard a safety feature that might have warned earlier of problems that possibly played a role in the crashes of Ethiopian and Indonesian planes that killed almost 350 people, two officials briefed on the matter said on Thursday.

recent news recent news recent news
recent news

Reuters Thu, 21 Mar 2019 18:22:34 -0400

Boeing Co said on Thursday that production lines will not "pulse" or move airframes forward for three days next week at its 737 factory to allow workers to catch up on work that was previously delayed.

recent news recent news recent news
recent news

Reuters Thu, 21 Mar 2019 18:08:52 -0400

Boeing Co will mandate a previously optional cockpit warning light as part of a forthcoming software update to the 737 MAX fleet that was grounded in the wake of two fatal crashes, two officials briefed on the matter said Thursday.

recent news recent news recent news
recent news

Reuters Thu, 21 Mar 2019 18:08:09 -0400

Tesla Inc filed a lawsuit on Thursday against a former engineer at the company, claiming he copied the source code for its Autopilot technology before joining a Chinese self-driving car startup in January.

recent news recent news recent news
recent news

Reuters Thu, 21 Mar 2019 18:06:40 -0400

General Dynamics National Steel and Shipbuilding Co has been awarded a $465 million U.S. defense contract related to aircraft carrier maintenance and modernization, the Pentagon said on Thursday.

recent news recent news recent news
recent news

Reuters Thu, 21 Mar 2019 17:34:46 -0400

An Apple-led tech rally pushed Wall Street higher on Thursday as jitters over the Federal Reserve's forecast of an economic slowdown were calmed by upbeat economic data.

recent news recent news recent news
recent news

Reuters Thu, 21 Mar 2019 17:29:04 -0400

General Motors Co will announce on Friday plans to invest $300 million in a suburban Detroit plant that builds electric and self-driving vehicles for Chevrolet and the automaker's self-driving Cruise unit, two people familiar with the plans said on Thursday.

recent news recent news recent news
recent news

Reuters Thu, 21 Mar 2019 17:10:04 -0400

Federal Reserve policymakers see a U.S. economy that is rapidly losing momentum. They predict inflation will miss their 2 percent target for yet another year, despite rising wages, and they expect unemployment to increase.

recent news recent news recent news
recent news

Reuters Thu, 21 Mar 2019 17:06:25 -0400

The Federal Reserve's decisive statement this week that interest rates are unlikely to rise this year sends a signal to U.S. households: keep buying stuff.

recent news recent news recent news
recent news

Reuters Thu, 21 Mar 2019 17:06:25 -0400

Finnish telecom equipment maker Nokia does not plan to take on any new business in Iran in 2019, it said in its annual report on Thursday, citing difficulties in dealing with conflicting U.S. and European trade policies.

recent news recent news recent news
recent news

Reuters Thu, 21 Mar 2019 17:02:23 -0400

Wall Street led global stocks higher on Thursday on the back of upbeat economic data, while the dollar rallied despite the Federal Reserve's uber-dovish stance as Brexit worries weighed on the euro and sterling.

recent news recent news recent news
recent news

Reuters Thu, 21 Mar 2019 16:55:14 -0400

Levi Strauss & Co's is betting it can convince investors there is still plenty of global growth left for the 165-year old company, but fund managers fret the iconic blue jeans maker's stock may be too pricey to generate a decent return.

recent news recent news recent news
recent news

Reuters Thu, 21 Mar 2019 16:25:42 -0400

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