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.

Baidu’s AI Bet Is Finally Big Enough To Threaten The Old Business

Posted on Aug 18, 2026 by Grayson Cavern

Baidu Inc (NASDAQ: BIDU) has reached the awkward stage of its AI transition where the new business is no longer a side project, but still isn’t large enough to replace what the old business is losing. It’s no wonder why Q2 revenue fell 4% to RMB31.3 billion, while non-GAAP EPS plunged 43% year over year to RMB7.22, giving investors a very different picture from the one suggested by Baidu’s rapidly expanding AI operations.

And that shift inside the company is becoming harder to miss as the Chinese company Core AI-powered Business generated RMB12.5 billion, up 25% year over year, and now accounts for 50% of Baidu General Business revenue, compared with 38% a year ago.

That is enough to tell us Baidu Inc is genuinely changing, but not enough to tell us whether the change is economically working yet.

Because while Baidu’s AI business is getting bigger, the part of the company that used to pay the bills is getting smaller. And the next numbers show just how wide that gap has become.

Baidu’s AI Growth Has A Big Hole To Fill

Baidu’s legacy business has deteriorated quickly enough that the company now needs its AI operations to carry far more weight, with Online Marketing Services revenue falling 19% year over year to RMB13.1 billion and Legacy Business revenue dropping 23% to RMB10.4 billion.

That makes the growth coming from AI Cloud much more consequential than the headline numbers suggest, because AI Cloud Infrastructure revenue jumped 50% to RMB7.3 billion while GPU Cloud revenue surged 283% year over year. Baidu is clearly finding demand for the computing infrastructure behind the AI boom, and that business is becoming large enough to change the company’s revenue mix.

The problem is that the two sides aren’t moving at the same scale yet: AI Cloud added roughly RMB2.4 billion of revenue year over year, while Online Marketing surrendered about RMB3.1 billion, leaving the newer business with a sizeable gap to close before it can fully offset the deterioration in search and advertising.

That tension is also what makes the criticism surrounding Baidu’s aggressive AI investment worth taking seriously as the company is trying to build a much larger AI business while its established profit engine is weakening underneath it, a dynamic highlighted in recent coverage of the results.

I wouldn’t bet against the transition yet, because 283% GPU Cloud growth is far too substantial to dismiss as corporate AI theater; I’d watch whether that growth can become large enough to replace what Baidu is losing elsewhere.

The 283% Surge That Could Change The Economics

The strongest part of the quarter is in the AI Cloud, where GPU Cloud revenue surged 283% year over year, accelerating from 184% growth in the previous quarter. That kind of acceleration is difficult to dismiss, particularly when total AI Cloud Infrastructure revenue also climbed 50% to RMB7.3 billion.

What makes the GPU number even more useful than a flashy growth rate is where it sits inside the broader transition: Baidu is selling the computing capacity needed to support the AI workloads moving through its ecosystem, while its AI-powered business has already reached 50% of General Business revenue.

There is still a lot to prove before that becomes a convincing earnings engine, especially with AI Applications revenue growing only 3% to RMB2.5 billion. The infrastructure side is doing the heavy lifting right now – while the higher-value question is whether Baidu can turn that infrastructure demand into a broader AI business with stronger economics, which is important for the stock, because spectacular infrastructure growth can make a company look transformed long before the income statement actually reflects the transformation. Baidu has the first part now. The next stage is getting the money to follow the growth.

$41.7 Billion Gives The AI Bet Room To Run

Baidu finished 2nd quarter with RMB283.1 billion, or about $41.7 billion, in cash, cash equivalents, restricted cash, short-term investments and long-term investments, while operating cash flow remained positive at RMB3.4 billion for the fourth consecutive quarter.

That gives management something Alibaba Group (NYSE: BABA), Tencent Holdings (OTC: TCEHY)/(HKEX: 0700) and JD.Com (NASDAQ: JD)/ (HKEX: 9618) also have as they pour money into their own AI ambitions – the financial room to wait for those investments to pay off.

Baidu can continue funding AI infrastructure, cloud capacity and applications without having to immediately turn every new investment into a profitable business.

The stock, however, isn’t giving management unlimited time. At $94.42, BIDU has fallen below its 20-day, 50-day and 200-day moving averages, sitting at roughly $106.86, $110.54 and $124.63, respectively. The latest selloff also pushed shares back toward the $90-$100 area that has acted as an important floor on the chart.

That leaves the company with a pretty straightforward job from here – keep growing the AI businesses fast enough to make today’s deterioration in search and advertising look temporary rather than structural.

The Stock Has More To Prove Than The AI Story

At $94.42, BIDU is sitting below every major moving average on the chart, and today’s 9.3% decline has pushed it back toward the $90-$100 area after failing to hold its August rebound. That is not the chart of a stock investors are eagerly pricing for an AI transformation.

The business itself is more complicated. AI Cloud is accelerating, GPU Cloud growth is extraordinary and AI-powered revenue now represents half of Baidu General Business revenue, but advertising is still declining fast enough to drag the consolidated company lower.

Still, I wouldn’t write off the stock here. The balance sheet gives Baidu enough firepower to keep building, and the AI transition has already become too substantial to dismiss. But until that growth starts showing up more convincingly in revenue and earnings, BIDU has something to prove before it deserves a rerating.