How to trade earnings reports?

T

thatSAMazing

Today I really would have liked to trade on RIMM but I didn't know where to quickly get the EPS numbers right when they were released. I thus waited for cnbc to show them which took too long and the stock had already gained over five points. At this point, I didn't know when it would stop and thus stayed on the sidelines and watched it gain five more.

My question is what is the quickest place to find things like these EPS numbers that show before the conference call.

Also, how can you estimate how high it's going to go and thus when to get out? For instance with RIMM, EPS was 65 and expected to be 62; Guidence was 68 and expected 65. When I saw RIMMs numbers I knew it would go up, but the numbers weren't so much over expectations that I expected it to gain 12 points after hours on top of a 5% gain at the close.

I would certainly appreciate some help on this. My first post btw. Love the forum. :)
 
If you really want to make money on earnings reports, you have to take a gamble. It is always uncertain whether or not a company's earnings will miss/beat/be in line. Then, there is street expectations, guidace, etc. There is no way to know how all of this will be perceived by John Q Public beforehand. There are stocks like ISRG that consistently beat expectations and the stock is off to the races. The only problem is, the ONE TIME you wager a bet that ISRG will rocket 20 points after a solid quarter, the whole thing will go gunnysack on you and you will cry for mommy.

As the last guy said, just don't do it.
 
Quote from thatSAMazing:

Today I really would have liked to trade on RIMM but I didn't know where to quickly get the EPS numbers right when they were released. I thus waited for cnbc to show them which took too long and the stock had already gained over five points. At this point, I didn't know when it would stop and thus stayed on the sidelines and watched it gain five more.

My question is what is the quickest place to find things like these EPS numbers that show before the conference call.

Also, how can you estimate how high it's going to go and thus when to get out? For instance with RIMM, EPS was 65 and expected to be 62; Guidence was 68 and expected 65. When I saw RIMMs numbers I knew it would go up, but the numbers weren't so much over expectations that I expected it to gain 12 points after hours on top of a 5% gain at the close.

I would certainly appreciate some help on this. My first post btw. Love the forum. :)
More...

tradethenews.com is pretty good.
 
Any news you get will be too late for you to make a decision how to trade earnings.

One strategy would be to buy front month near term ATM (or 1 strike OTM) Calls on high flying stocks (GOOG, RIMM, SNDK, BIDU) 1 or 2 weeks before earnings and sell the day of earnings, or day before if earnings are in the morning.

Another strategy would be to wait the day after earnings and on a huge move (10% plus) buy Calls or Puts depending on the move and sell the next day to catch the momentum. Example:
  • Buy RIMM Jan ATM Calls tomorrow and sell them on Monday.
  • Buy LDK Jan (or Dec) ATM Puts today, sell tomorrow - too late for this one.
 
Are these news sites faster than getting the press release from the website? Who's usually the first to get the info?

Thanks for the replys so far everyone. To those who suggest that this is not a good idea, I generally agree. There are exceptions sometimes for me though, and RIMM was widely expected to move on the news.

Forex, would you really buy calls on the morning after such a huge run up? Isn't it possible that it's gone up too much and will correct?
 
you dont trade earnings reports you gamble on them...I cant beleive how many EXPERTS on TV(cramer and fast money idiots) tell people to go ahead and buy and hold before report...
 
I'm currently of the opinion that these gambling comments are just incorrect. Betting BEFORE the numbers are out IS gambling. Betting afterwards is just good sense. A company reports blowout numbers, it's stock will probably go up. This is far less like gambling than following a trend that could turn at any minute, is it not? If trading reported earnings is gambling then trading the news is as well, and the truth is that trading the news is what causes the trends that most follow in the first place. Can you give me an example of how trading surprise blowout earnings is bad if you get in fast enough?
 
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