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.

Meta Q3: How Much More Does Mark Have to Spend on AI?

Posted on Oct 22, 2026 by Grayson Cavern

Meta Platforms (NASDAQ: META) grew revenue 26% in the third quarter 2026 report, and advertisers paid 14% more for their ads. Then the company spent $34.9 billion on capital expenditures in three months and ended up with negative $2.12 billion in free cash flow.

I can see why investors are excited about Meta’s AI push. Its advertising business is getting stronger, its recommendation systems are improving, and the company says those AI investments are already bringing in more advertising revenue.

But if you own the stock, there is another number worth considering. One year ago, Meta generated $10.6 billion in free cash flow in the third quarter. This time, it burned through cash.

So, how much more does Mark have to spend before the payoff catches up with the bill?

Advertising Revenue Surges as AI Improves Ad Performance

Start with the advertising numbers, because they tell us what Meta is getting right. Revenue reached $64.60 billion, up 26% year over year, while advertising revenue climbed to $63.06 billion. Ad impressions increased 10%, average prices rose 14%, and the company’s family of apps reached 3.64 billion daily active people, up 3%.

Put yourself in an advertiser’s shoes for a moment. You can reach billions of people across Facebook, Instagram, Messenger, and WhatsApp, and Meta is getting better at matching ads with the people most likely to respond. If that translates into better results for your business, paying more for the placement becomes easier to justify. The company gets to charge more while showing more ads, and revenue grows without needing its user base to expand at the same pace.

Management credits AI-powered recommendations, engagement, and ad monetization for part of that improvement. We cannot pin the entire 26% revenue increase on AI, but Meta says the technology is already generating incremental advertising revenue. That is a far stronger case than asking shareholders to buy into a vision with no commercial evidence behind it.

In July, I explored how long Meta could run on vision and ideas. Since then, the company has given us more evidence that its AI ambitions can strengthen the business it already owns. The debate has moved on to what the company must spend to keep that advantage growing.

Meta Earnings Face a $9.89 Billion Legal Charge

Meta reported operating income of $12.99 billion, down 37% year over year, and diluted earnings per share of $3.83. Those figures look out of place beside 26% revenue growth, until you account for the $9.89 billion charge tied to its agreement with 52 state attorneys general over litigation involving teen mental health and social media.

Remove that charge, and operating income rises to $22.88 billion while diluted EPS reaches $7.40. The underlying business performed much better than the headline earnings suggest, so I wouldn’t use the reported decline as evidence that Meta’s advertising engine has stalled.

Still, the legal bill deserves more than a footnote. Meta continues to face youth-related scrutiny, with additional US trials scheduled in the coming months. Adjusting for a one-time charge helps us assess operating performance, but it doesn’t erase the legal exposure or guarantee that future proceedings will come cheaply.

AI Spending Pushes Free Cash Flow Into Negative Territory

Now this deserves a proper debate. Meta generated $32.79 billion in operating cash flow, but capital expenditure and principal payments on finance leases pushed free cash flow to negative $2.12 billion. In Q3 last year, free cash flow was positive $10.63 billion. That is a $12.75 billion swing in twelve months.

And management has raised its 2026 capital expenditure outlook to $135 billion–$145 billion, lifting the bottom end of its previous range. The company plans to keep investing aggressively in AI infrastructure, model training and new products. It has also acknowledged that these newer investments will take longer to generate returns than investments in its core business.

I understand the argument for spending now. AI is improving Meta’s advertising tools, and falling behind in infrastructure or model development could leave competitors with an advantage that becomes expensive to recover. When a business serves billions of people, even small improvements in recommendations and ad performance can translate into enormous sums.

But shareholders still have to fund the buildout, and they cannot pay their bills with engagement gains or promises about future models. Meta held $82.45 billion in cash, cash equivalents, and marketable securities at quarter-end, so a negative free-cash-flow quarter does not put the company in immediate financial trouble. The concern is how long spending at this scale continues, and whether the returns eventually justify it.

Can AI Growth Justify Up to $145 Billion in Spending?

META closed regular trading at $697.52 before climbing to $712.47 after hours, up 2.14%. The stock remains below its 20-day moving average near $729.54, although it trades above the 50-day average around $661.46 and the 200-day average near $632.62. Reclaiming $730 would help repair the near-term chart; a pullback toward $660 would test the strength of the recovery.

So, how much more does Meta have to spend on AI? With capex projected at $135 billion to $145 billion this year, shareholders need to see those investments translate into stronger cash flow. The company’s advertising engine is already benefiting from AI, and that gives the spending a credible purpose. If those gains continue and free cash flow recovers, the bill could prove worthwhile. Until then, Meta has earned room to invest, not a blank cheque.