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:

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
Sell-to-close after 7-10 days, or possibly earlier if a desired price target is reached

Similarly,

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
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:

Stocks exhibiting positive post-EA price moves are buy-candidates
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:

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

Strategy Guideline:

Buy the stock if stock has reacted positively. Short the stock if stock has reacted negatively (see above).
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.

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:

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

Strategy Guideline:

Options Strategy: Sell Call and Put
Options Strike Price: Current Stock Price – (% Predicated Move x 2)
Expiration Date: It should generally be the closest expiry immediately after the EA.
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:

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

Strategy Guideline:

Buy a Straddle at or close to the money two to three weeks pre-EA.
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.
Expiration date should generally be the closest expiry immediately after the EA.
Straddle price should not be more 60% of predicted move.

Predicted Move (Volatility)

Similar to Implied Volatility in Options. Expected volatility % based on our Proprietary Volatility Predication Model. We are expecting that stock price will likely to reach % in either direction by the end of next trading session after Earnings are released and not necessarily the closing volatility %.

Why is it important?

This indicator helps

Knowing expected volatility in stocks after Earnings helps to decide trading stocks before Earnings Announcement.
Taking Advantage of volatility collapse following Earnings Results by using Advance Options strategies such as Spread and Straddles.

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.

3 Mid-Cap Stocks Challenging the Mag 7’s Grip on the AI Trade

Posted on Oct 06, 2026 by Grayson Cavern

The AI trade has become so concentrated that it is easy to forget how much money has to be spent before an AI model can answer a single prompt. Nvidia (NASDAQ: NVDA) supplies the GPUs, while other mega-cap technologies are building enormous computing capacity and driving the market higher at the same time.

But under the hood, the physical AI buildout creates problems software cannot solve. More GPUs mean more heat. More AI infrastructure means more electricity. Thousands of accelerators also need to be integrated, deployed, and managed before they generate anything for a customer…

Thereby putting three much smaller companies in very different parts of the same AI trade: Modine (NYSE: MOD), Penguin Solutions (NASDAQ: PENG) and Powell Industries (NASDAQ: POWL).

As of this moment, MOD is worth $9.71 billion, PENG $3.11 billion, and POWL $7.21 billion. Their market caps have climbed 25.4%, 113.9%, and 96.4%, respectively, over the past year.

MOD Is Selling Into AI’s Heat Problem

The more computing power you pack into a data center, the harder thermal management becomes. That gives Modine (MOD) a direct way to participate in the AI buildout without selling a single GPU.

Modine’s latest quarterly results? show how quickly that business is scaling. Q1 fiscal 2027 revenue reached $874.1 million, up 28% year over year, while EPS rose 44%. Data Center revenue was the standout, jumping 90% year over year.

MOD closed at $182.91 on October 5, sitting just above its 20-day SMA at $181.49 but below its 50-day at $185.61 and well below its 200-day at $207.01. After falling from above $300 earlier in the year, the stock found buyers around $170-$175 in September and has started forming a higher-low structure.

A move through $186 would put the 50-day average back underneath the stock, while $200-$207 is the much bigger test. Until then, MOD is recovering from a major drawdown rather than sitting in a confirmed long-term uptrend.

That makes the operating growth particularly important. Modine already shows a business seeing substantial demand from data-center customers, while the cooling problem only becomes more demanding as computing density rises.

PENG Is Moving From Hardware To AI Factories

Penguin Solutions (PENG) sits closer to the point where AI hardware becomes a functioning system.

The company reported record Q3 fiscal 2026 revenue of $478.7 million, up 48% year over year. GAAP operating income jumped 417%, while non-GAAP EPS increased 79%. Management subsequently raised its full-year outlook as demand strengthened across its Integrated Memory and AI Infrastructure businesses.

Then comes the Nvidia relationship. Penguin became an NVIDIA AI Factory Specialized Partner?, covering the design, deployment, and management of full-stack Nvidia-based AI infrastructure.

The stock chart is considerably stronger than MOD’s. PENG closed at $60.71, more than $7 above both its 20-day and 50-day SMAs, which sit around $53.37 and $53.41. The 200-day SMA is down at $39.93. More importantly, PENG has broken above the descending trendline that had capped the stock since its July peak near $80.

The next hurdle is around $62, followed by the $70 area. Holding above $53-$54 would preserve the current breakout structure. For me, that combination of accelerating revenue and a technical breakout makes PENG the most aggressive momentum setup of the three.

POWL Is Selling The Electricity Behind AI

Powell Industries (POWL) takes the thesis further down the physical supply chain.

Powell makes engineered equipment for the management, control, and distribution of electrical energy. Its Q3 fiscal 2026 results showed $934 million of new orders, up 158%, pushing backlog to $2.4 billion, up 69%. Book-to-bill reached 3.0x. In fact, Powell also secured a data-center project worth more than $400 million.

And the chart has now started recovering too. POWL closed at $197.84, above its 20-day SMA at $185.03 and 50-day at $193.30, after bouncing from the $165-$175 area in September. The 200-day SMA sits at $208.09, making $200-$208 the immediate technical ceiling.

A clean break through that zone would put POWL back above its long-term average for the first time since its summer decline. Failure there leaves the stock trapped between roughly $175 support and $208 resistance.

The AI Trade Has a Much Bigger Supply Chain

This is where I think the opportunity gets interesting for investors who already own the obvious AI winners.

Nvidia, Microsoft, Amazon, and Alphabet have captured the attention because their products sit at the center of the AI revolution. But just as you’ve seen, MOD, PENG, and POWL sit further down the chain, where the physical constraints of that revolution are becoming increasingly expensive to solve.

None of these companies needs to become the next Nvidia for the thesis to work. They need AI capital spending to keep flowing into data centers, and their recent financial results suggest that spending is already reaching their businesses. Getting exposed to this basket of 3 smaller companies, sitting underneath the same multitrillion-dollar AI spending cycle, each attacking a physical bottleneck the Mag 7 cannot simply wish away…is almost a no-brainer for me.