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.

TSMC Q3 Earnings Show AI Demand Is Outpacing Margin Growth

Posted on Oct 16, 2026 by Grayson Cavern

Taiwan Semiconductor Manufacturing (NYSE: TSM) just posted its Q3 earnings with 41.2% year-over-year revenue growth, raised its next-quarter revenue outlook to as much as $54.3 billion, and is ramping its next-generation 2nm process. Yet TSMC stock closed October 15 at $422.25, nearly $60 below its recent high around $480.

That gap takes us back to the question in our earnings preview: can TSMC turn relentless AI demand into sustained growth while keeping its margins intact? The Q3 numbers strengthen the growth case. The margin trend and stock chart are still things the company has to prove to investors.

The Revenue Beat Was Real

TSMC reported Q3 revenue of $46.72 billion, up 41.2% year over year and 16.2% sequentially, beating its own forecast of $44.6 billion to $45.8 billion. Net income rose 68.7% year over year to NT$ 763.06 billion, while diluted EPS increased 68.7% to NT$29.43, equivalent to $4.60 per ADR.

The sequential acceleration stands out. Q2 revenue was $40.20 billion, up 33.7% year over year, so the growth rate picked up again in Q3. TSMC is converting demand from its customers into reported sales at a faster clip, and the latest quarter came in above management’s own range.

For semiconductor investors, that is a stronger signal than a beat against analyst estimates alone. Management set the bar, then cleared it. But the next question is whether the revenue ramp can keep delivering without the cost of bringing new capacity online eating into profitability.

The 2nm Ramp Is Starting to Show

The wafer mix provides another piece of evidence. Technologies at 7nm and below accounted for 79% of wafer revenue in Q3, up from 77% in Q2. Within that mix, 2nm rose from 3% to 8%, while 3nm increased from 30% to 33%. Five-nanometer technology declined from 33% to 28%.

The 2nm contribution is particularly worth tracking. It is growing from a small base, while 3nm remains a major part of the business. As TSMC ramps newer process technologies, the company is moving more wafer revenue through its leading-edge manufacturing portfolio. That gives investors a measurable way to track the advanced-chip demand behind the AI trade, rather than relying on broad promises about data-center spending.

There is a catch in the profitability figures. Gross margin fell to 66.4% in Q3 from 67.7% in Q2, while operating margin declined to 58.7% from 60.3%. Both metrics remained high, but the sequential decline means revenue growth has not been accompanied by expanding margins. I’d keep an eye on this. TSMC is shipping more, and newer nodes are taking a larger share of wafer revenue. The margin line still needs to show how efficiently the company can scale that production.

Q4 Guidance Raises the Bar Again

Management forecast Q4 revenue of $52.3 billion to $54.3 billion, with gross margin of 65% to 67% and operating margin of 56.5% to 58.5%. It also pointed to continued demand for leading-edge process technologies and a steep ramp-up of 2nm.

At the midpoint, the revenue forecast implies approximately 14% sequential growth from Q3’s $46.72 billion. That is another substantial step up in sales, while the projected gross-margin range sits around Q3 levels. Operating margin could improve modestly, but guidance does not point to an immediate return to Q2’s 60.3%.

The next quarter therefore puts two metrics in direct competition: how much revenue TSMC can bring through the door, and how much profit it retains as the 2nm ramp gathers pace. A revenue beat would extend the growth trend. Better-than-guided margins would add evidence that the ramp can scale efficiently.

TSM Needs to Reclaim $434

The chart has weakened since the preview’s $480 resistance test. TSM closed October 15 at $422.25, below its 20-day moving average at $453.57 and 50-day average at $434.48, while remaining above its 200-day average at $394.48.

The retreat from the highs has put the stock beneath short- and medium-term trend gauges, despite the strong operating results.

The first hurdle is $434–$435, around the 50-day moving average. A reclaim would put the stock back above that near-term resistance. The 20-day average near $454 comes next, with $480 remaining the major ceiling from the prior peak. On the downside, the rising trendline around the low $410s and the 200-day average near $394 are the levels to watch.

Our preview focused on whether TSMC could deliver growth while protecting margins. Q3 answered the first half emphatically; Q4 guidance points to another revenue jump. The margin trend is still the unresolved part. I like the business, but after the rejection near $480, I would want to see TSM reclaim $434 before treating the pullback as finished.