What Is an Earnings Event?
Earnings are scheduled reports where a company updates the market on performance (EPS, revenue, margins) and often provides forward guidance. The reaction is usually about expectations vs reality, not just whether numbers are “good.”
What Moves Price Most
- Guidance: forward revenue/EPS outlook can matter more than the quarter that just happened.
- Margins: growth with shrinking margins can be bearish.
- Trends: subscriber growth, bookings, ARPU, units sold, or other key KPIs.
- Positioning: if everyone is already bullish, even a “beat” can disappoint.
Options Reality Check
- Expected move: markets imply a range (via IV). If the move is smaller, options can lose.
- IV crush: volatility usually collapses after the event.
- Liquidity spreads: wide bid/ask makes fills worse around the report.
- Time: short-dated contracts decay brutally if price stalls.
Practical Checklist
- When is it? premarket or after-hours.
- What’s the expected move? compare to your target levels.
- Key KPI? identify what matters for that company (not generic EPS).
- Zoom out: compare reaction to major support/resistance on the chart.
FAQ
Should I trade earnings every week?
Not necessarily. Earnings can be high-variance. Many traders treat them as “special situations” and only play when setup + risk are clear.