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.

IBM Q3 Earnings: Software Is Accelerating, and Cash Flow Is Following

Posted on Oct 22, 2026 by Grayson Cavern

International Business Machines Corp. (NYSE: IBM) just delivered 6% revenue growth at constant currency, grew adjusted earnings per share by 11%, and generated $3 billion in quarterly free cash flow. Management also raised its full-year free-cash-flow growth outlook, giving investors more evidence that IBM’s shift toward software, hybrid cloud and enterprise AI is feeding into the financials.

As you’ll discover, this is a business gaining momentum where it counts, just as we flagged the potential for a recovery in our earlier IBM earnings preview, where software growth, delayed deals and the full-year outlook were central to the thesis. Q3 has now given us a stronger software print and an upgraded cash-flow outlook, although the after-hours selloff shows the stock still has ground to make up.

Software Growth Accelerates as Red Hat and Data Lead

IBM generated $17.1 billion in Q3 revenue, up 5% year over year and 6% at constant currency. Adjusted diluted EPS reached $2.95, up 11%, while operating pre-tax margin expanded 70 basis points to 19.3%. The earnings beat came with better profitability and stronger cash generation, giving the quarter more substance than a headline revenue surprise.

Software is doing much of the heavy lifting. Revenue climbed 8.2% to $7.8 billion, with Data growing 19%, Transaction Processing up 9%, and Red Hat’s hybrid-cloud business expanding 11%. OpenShift, IBM’s enterprise Kubernetes platform, reached $2.4 billion in annual recurring revenue, with growth accelerating beyond 30%.

I like the breadth behind those numbers because the company isn’t relying on a single AI product to carry the quarter. Enterprises need data infrastructure, secure hybrid-cloud environments, and software that can integrate AI into existing workflows, and IBM is selling across those layers. Its recurring-revenue base also gives the company a foundation for compounding growth as customers expand deployments.

Management raised its full-year software growth outlook to approximately 7%–8%, using 7% as its revised base case. That upgrade gives the investment thesis a clearer direction: software growth is accelerating, and IBM expects that momentum to carry into the final quarter.

IBM’s AI Growth Extends to Infrastructure and Consulting

Infrastructure revenue increased 4.2% to $3.7 billion, or 4.9% at constant currency, led by 31% growth in distributed infrastructure. IBM Z revenue fell 20%, reflecting the uneven timing of mainframe demand, but distributed infrastructure and storage are benefiting as clients modernize systems and support heavier AI workloads.

Management also pointed to a sizable distributed-infrastructure backlog exiting the quarter, which supports the expectation of continued momentum in Q4. That gives IBM another growth contributor alongside software, even as individual product cycles move in different directions.

Consulting was the weaker part of the report. Revenue was essentially flat at $5.34 billion, while segment profit margin slipped to 12.2% from 12.9%. Automation revenue also declined 3%, showing that Big Blue’s growth isn’t evenly spread across the portfolio.

Still, consulting’s role in enterprise AI deployments could help connect the company’s software and infrastructure offerings to larger client projects. The company reported that AI represented about 30% of consulting revenue and 35% of its backlog. Converting those engagements into sustained revenue growth will be important as IBM pushes toward a more software-led business model.

Free Cash Flow Rises as Acquisitions and Debt Remain in Focus

IBM generated $3.03 billion in free cash flow during Q3, up from $2.37 billion a year earlier. For the first nine months, free cash flow reached $7.79 billion, compared with $7.18 billion in 2025. Operating cash flow excluding IBM Financing receivables also increased to $3.48 billion for the quarter from $2.78 billion.

Those gains underpin management’s decision to raise its full-year free-cash-flow growth expectation to more than $1 billion year over year, while maintaining its forecast for 4%–5% revenue growth at constant currency. The company expects 100 basis points of operating pre-tax margin expansion for the full year, supported by productivity initiatives and tighter operating discipline.

IBM is using AI and automation internally to improve software development, sales efficiency and services delivery, with those productivity gains helping fund investment and shareholder returns. The strategy is beginning to show up in margins and cash flow, although higher capital expenditure, cash taxes and net interest expense continue to absorb some of the gains.

Acquisitions add another layer to the equation. The company invested $11.4 billion in acquisitions during the first nine months, and total debt stood at $63.8 billion at quarter-end, including $12.7 billion tied to its financing business. Cash, restricted cash and marketable securities totaled $11.1 billion, down $3.4 billion from year-end 2025.

The balance sheet remains investment grade, and IBM returned $4.8 billion to shareholders through dividends in the first nine months. But acquisitions and continued investment need to deliver durable growth if IBM is to keep expanding cash flow without allowing the debt burden to become a larger concern.

IBM Stock Drops After Earnings Despite Strong Fundamentals

IBM’s chart showed a potential breakout above a descending trendline, with the regular-session close at $251.46 moving above the 200-day moving average at $250.92. The after-hours slide to $239.81 has put that move in doubt, bringing the $232–$240 area into focus as the first zone bulls need to defend. A break lower could send the stock toward $220, while reclaiming $250–$251 would help restore the breakout case.

IBM Stock Outlook: Why the Bullish Case Still Holds

I’d stake my bet on IBM because software growth is accelerating, infrastructure is gaining traction and free cash flow is moving higher alongside margins. The stock’s reversal creates a tougher technical picture, but it doesn’t undo the operating progress in the report.

The next leg depends on the company sustaining software momentum and converting more of its AI opportunity into cash. Q3 gives investors evidence that the strategy is working; the coming quarters need to show that the gains can keep compounding.