How to Prepare for Earnings Season

Earnings season is one of the most anticipated periods in the trading calendar. Every quarter, publicly listed companies reveal their financial health. With each report, market sentiment can swing dramatically.

For traders, this isn’t just a time to sit back and watch: it’s an opportunity to capitalise on short-term volatility and realign longer-term strategies

Here’s how to prepare for earnings season with confidence.

1. Know the Schedule

Start by checking the earnings calendar. Most platforms, including VT Markets’ economic calendar, provide a detailed list of upcoming earnings reports. Pay special attention to:

• Market-moving giants: Think Apple, Amazon, Microsoft, Tesla.
• Sector leaders: Key companies in industries like banking, energy, or tech.
• Companies with recent news: Mergers, lawsuits, or product launches can amplify the impact of earnings.

Tip: Look for companies that report before market open (BMO) or after market close (AMC)—these are prime setups for pre-market or after-hours volatility.

2. Study Past Performance and Expectations

Earnings surprises move markets. Compare the upcoming estimate (EPS) to:

• The previous quarter’s results
• The company’s guidance
• Industry benchmarks

A beat doesn’t always mean a rally—if the market expected stronger numbers, even a positive report can disappoint. Likewise, weak earnings might trigger a rally if investors had priced in worse outcomes.

Tip: Review the last few earnings reports to see how the stock typically reacts. Some companies are consistently volatile; others less so.

3. Watch the Options Market (Implied Volatility)

The options market offers clues on expected movement. Elevated implied volatility (IV) suggests traders are bracing for a big move. Use this to help size your positions or decide whether to trade before or after the report.

Tip: If IV is extremely high, the market may already be pricing in a major surprise—watch for a post-earnings volatility crush.

4. Build Your Trade Plan

Before trading earnings, answer these:

• Direction: Are you bullish, bearish, or expecting sideways movement?
• Timing: Will you hold through the report or trade post-announcement reaction?
• Risk management: What’s your stop-loss, and how much capital are you risking?

Common earnings strategies:

• Pre-earnings run-up: Buy ahead of the report if you expect optimism to push prices up.
• Post-earnings breakout: Trade the reaction once the news is out.
• Options plays: Use straddles, strangles, or spreads to capture volatility.

5. Stay Informed During the Call

The numbers are just the beginning. The earnings call often provides critical insights into future performance:

• Forward guidance
• Commentary on macro risks (inflation, rates, regulation)
• Sector-specific trends

Tip: Follow live commentary on VT Markets’ platforms or financial news sources for instant takeaways.

Final Thoughts

Earnings season can be chaotic. But with the right preparation, it becomes a period of opportunity rather than uncertainty. Research deeply, manage risk, and never chase hype without a plan. Whether you’re trading Apple’s margins or a small-cap biotech’s first profitable quarter, discipline is your biggest edge.