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.

Tesla’s $43.5 Billion Cash Pile Faces a High-Stakes AI Test

Posted on Oct 20, 2026 by Grayson Cavern

Tesla (NASDAQ: TSLA) has a $43.5 billion cash pile, a growing energy business, and ambitious plans for robotaxis and humanoid robots. Yet its operating margin collapsed to 1.4% in Q2, just as capital spending accelerated. The company is attempting to build its next growth engine while its automotive business faces mounting pressure to deliver the profits that will pay for it.

Tesla reports third-quarter earnings on Wednesday, October 21, after the market closes. The company-compiled analyst consensus calls for $28.34 billion in revenue and 45 cents in adjusted EPS. Revenue would be roughly flat year over year, while adjusted earnings would fall from 50 cents a share.

The stakes extend beyond an earnings beat. The company is committing more capital to AI compute, robotaxis, and robotics while investors debate whether its automotive economics can support those ambitions. This quarter needs to show that the core business can keep funding the transition.

Tesla’s Delivery Beat Needs to Reach the Bottom Line

Tesla delivered 486,532 vehicles in Q3, beating Wall Street’s estimate of approximately 462,000. Deliveries still declined 2.1% year over year from 497,099, according to the company’s Q3 production and delivery report. Production came in at 464,391 vehicles, around 22,000 below deliveries, allowing Tesla to work through inventory.

That is a useful volume result, but Q2 showed how little protection stronger sales provide when margins deteriorate. Revenue increased 26% year over year to $28.24 billion, yet operating income fell 57% to $398 million. Operating margin contracted to 1.4%, while adjusted EBITDA declined 4% to $3.27 billion. Tesla’s Q2 2026 details the pressure from lower average selling prices, reduced regulatory-credit revenue, and higher operating expenses tied partly to AI research and development.

Automotive gross margin excluding regulatory credits stood at 16.3% in Q2. With price competition limiting Tesla’s ability to push vehicle prices higher, manufacturing efficiency and product mix carry more weight in the earnings equation.

For Q3, I’m watching automotive gross margin, average selling prices, regulatory-credit revenue, and operating expenses. A delivery beat has already landed. The next catalyst is evidence that Tesla can turn those vehicles into stronger operating income.

The AI Bill Is Getting Bigger

Capital spending reached $5.79 billion in Q2, up 142% year over year. Operating cash flow of $4.70 billion could not cover that outlay, leaving free cash flow at negative $1.09 billion. Cash and investments ended June at $43.52 billion.

The latest Tesla Q3 analyst consensus projects approximately $7.77 billion in capital expenditures and negative $4.51 billion in free cash flow. For the full year, analysts expect capex of roughly $25.35 billion.

The spending supports Tesla’s expansion into AI compute, autonomous driving, and robotics. During the first half of 2026, the company more than doubled its onsite AI compute capacity in Texas. Cybercab production has begun, robotaxi operations are expanding, and Tesla is installing first-generation Optimus production lines in Fremont. The company also expects Tesla Semi and Megapack 3 production to begin this year.

These projects could eventually produce higher-margin revenue streams. For now, they require substantial upfront investment. Q3 cash flow and management’s updated spending plans will show how much financial flexibility Tesla retains as it builds those businesses.

Robotaxis Must Earn Their Valuation Premium

Tesla’s bull case increasingly depends on software and autonomous driving becoming meaningful profit centers. Active FSD subscriptions rose 56% year over year to 1.48 million in Q2. Services and Other gross profit also climbed $302 million sequentially to a record $648 million, reaching a 14% gross margin. Those figures provide early evidence of a business extending beyond vehicle sales.

The next earnings call should clarify whether robotaxi deployment is advancing toward scalable commercial operations and whether FSD adoption is translating into recurring revenue. Optimus offers another potential growth avenue, but production milestones alone cannot establish its eventual contribution to earnings.

Meanwhile, speculation around a potential Tesla–SpaceX combination has added another variable to the stock. But keep in mind, any transaction remains speculative, so the company’s operating results should carry more weight than merger chatter.

TSLA Needs to Reclaim Its Trend

TSLA stock closed at $368.06 on October 19, up 3.76%. Its 20-day moving average sits at $369.97, the 50-day at $360.25, and the 200-day at $387.58.

The recovery from July’s low near $300 has improved the chart, but TSLA remains below its 200-day average and a descending trendline from the spring highs. Resistance around $378–$380 comes first, followed by $387–$390. On the downside, $350–$355 is a key support zone near the rising trendline.

Still A Buy…But

My stance is BUY, with profitability and AI execution as the catalysts. Tesla has demonstrated demand resilience, but the next leg higher needs stronger automotive economics and tangible progress toward monetizing AI. Improving margins alongside disciplined spending would strengthen the bull case. If cash burn accelerates while operating profitability remains thin, the stock could struggle to clear overhead resistance.