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.

Honda Earnings Reveal a Promising Recovery Beneath Costly EV Reset

Posted on Nov 12, 2026 by Grayson Cavern

Honda Motor (NYSE: HMC) has spent billions of yen unwinding an electric-vehicle strategy that no longer fits the market it wants to compete in. The financial damage is now weighing on its second-quarter earnings.

Operating profit fell 39.2% year over year to ¥117.9 billion, despite revenue increasing 12.9% to ¥5.976 trillion. Yet separating the EV restructuring charges reveals a different picture. Adjusted operating profit more than doubled to ¥602.8 billion from ¥295.7 billion a year earlier. As you’ll discover, Honda is now absorbing a costly strategic reset while several established operations are becoming more profitable.

The Automotive Recovery Is Hiding Behind The EV Charges

Honda’s automobile division generated ¥3.804 trillion in second-quarter revenue, up 10% year over year, but reported a ¥197.9 billion operating loss compared with a ¥43.4 billion loss a year earlier. Excluding EV-related charges, the division produced ¥286.9 billion in operating profit, nearly five times the ¥58.3 billion recorded in the prior-year quarter. Its adjusted operating margin climbed from 1.7% to 7.5%. Higher sales volume and model mix contributed ¥89.2 billion to adjusted automotive operating profit, lower expenses added ¥66billion, and foreign-exchange effects supplied another ¥57.4 billion.

But while these gains show Honda extracting more profit from its automobile operations, even as the company absorbs the consequences of its EV strategy change… the restructuring remains expensive. Honda recognized ¥479.2 billion in incremental EV-related expenses during the first half, alongside ¥5.6 billion in development-asset and equipment impairment. Those costs belong in the investment case because shareholders ultimately bear them. However, they also obscure the improvement in the existing automotive business. The more useful question is whether Honda can sustain those improved margins as the restructuring bill starts to recede.

Motorcycles Are Providing The Earnings Muscle

Honda’s motorcycle division gives the company a profitable foundation while its automobile operations work through the reset. First-half motorcycle sales reached 11.9 million units, up 10.6% year over year. Revenue climbed 18.3% to ¥2.273 trillion, and operating profit increased 19.2% to ¥439 billion. The division maintained a 19.3% operating margin, giving the company a substantial source of earnings from markets where it already commands strong positions.

India and Brazil are driving much of that growth, with higher sales volumes in both markets contributing to a ¥70.7 billion increase in motorcycle operating profit. The plan is to expand annual production capacity at its Manaus factory in Brazil from 1.6 million to 2.3 million units by 2029. The facility serves as an export hub for 19 countries, and Honda estimates its share of Brazil’s motorcycle market at approximately 70%.

This is the foundation beneath Honda’s wider recovery. Its motorcycle business already generates substantial profits, while its automotive strategy increasingly emphasizes hybrids and markets where the company sees stronger demand. Honda can therefore fund its transition from established operations rather than depending entirely on a future EV rebound.

Higher Guidance Comes With A Heavier Investment Bill

Management raised its fiscal 2027 operating-profit forecast by ¥130 billion to ¥780 billion, a 20% increase. Honda now expects ¥24.4 trillion in revenue and ¥500 billion in net profit attributable to owners of the parent. Its adjusted operating-profit forecast also increased to ¥1.3 trillion from ¥1.17 trillion, despite a full-year estimate of ¥520 billion in EV-related losses.

The revised sales outlook shows where management sees its opportunities as Honda cut its full-year automobile sales projection by 230,000 units to 3.16 million, with the reduction concentrated in China, while raising its motorcycle forecast by 500,000 units to 23.3 million. North American demand for fuel-efficient and hybrid vehicles has provided support, and Honda plans to expand regional automobile production capacity by 2029 as it prepares to introduce larger hybrid models.

Sure, the expansion will consume significant capital. In fact, First-half operating cash flow from non-financial services businesses increased to ¥929 billion, but investing outflows climbed to ¥662.6 billion, pulling free cash flow down to ¥266.4 billion from ¥760.6 billion a year earlier. Capital expenditure reached ¥829.7 billion, and Honda expects full-year spending of ¥1.4 trillion. Its ¥5.028 trillion cash balance and ¥3.404 trillion net cash position provide room to execute, but investors need to see the investment cycle produce stronger returns.

HMC’s uptrend is approaching a decision point

HMC’s daily chart still reflects a broader advance, with shares climbing from roughly $24 in April to a recent peak near $36. At $33.35, the stock has slipped below its 20-day moving average of $34.41 but remains just above its 50-day average at $33.15. The 200-day average sits at $29.06, keeping the longer-term trend pointed upward. The $33 area is where buyers need to show up. Holding the 50-day average would give HMC room to reclaim $34.41 and challenge its recent $36 high. A decisive break below $33 would weaken the setup and put the rising trendline under pressure. The pullback has cooled the stock’s momentum, but it has not yet broken the broader advance.

Honda’s Recovery Deserves A Place In The Portfolio

Honda is taking a painful charge to redirect capital toward businesses with firmer commercial footing, and the second quarter shows that the established operations are already generating better returns. Motorcycle profits provide a strong earnings base, adjusted automotive margins have improved sharply, and management has raised its full-year forecast. China, EV restructuring costs, and heavier capital spending remain risks, but Honda’s balance sheet gives it room to work through them.

I’d stay long HMC. The stock is testing support after a substantial advance, while the earnings picture continues to improve beneath the headline EV losses. As long as buyers defend the $33 area, the path back toward $36 remains open, and I see more reason to hold through this pullback than to step aside.