Earnings Trading

Earnings Trading

Trade volatility and price moves around quarterly earnings, where surprise vs expectations drives the reaction.

Earnings Impact Matrix

| Scenario | Typical Reaction | | --- | --- | | Beat EPS + Beat Revenue + Raise Guidance | Strong rally (highest conviction long) | | Beat EPS + Beat Revenue | Moderate pop | | Meet expectations | Muted / slight dip | | Miss EPS or Revenue | Drop | | Miss + Lower Guidance | Strong sell-off (highest conviction short) |

Whisper Number

The published consensus is the "official" expectation, but the real expectation (whisper number) determines the reaction.

• Stock runs up 15% into earnings = market expects a big beat regardless of published consensus
• "Beat consensus by 2% but stock drops" = whisper was much higher than consensus
• "Missed by 1% but stock rallies" = whisper was even lower than consensus

Estimate the whisper from pre-earnings price action and sentiment:

• Strong rally into earnings = whisper well above consensus
• Pre-earnings selling = whisper below consensus
• Flat = whisper roughly equals consensus

Post-Earnings Drift

Stocks that surprise on earnings tend to continue drifting in the same direction -- one of the most documented market anomalies.

• Stocks beating EPS by >10% continue drifting same direction ~65% of the time for 60+ days
• Drift is strongest in the first 5 trading days
• Drift is significantly stronger when accompanied by raised guidance
• Entry: after initial reaction settles (1-2 hours post-release or next open)
• Use a trailing stop rather than fixed target

Workflow

1. Get Consensus Estimates

get_fundamentals(ticker="AAPL")

Pull EPS estimates, revenue estimates, earnings date, and historical beat/miss pattern.

2. Research Expectations and Sentiment

get_financial_news(topic="AAPL earnings Q1 2026 expectations analyst", max_results=15)

Look for analyst notes, price target changes, pre-earnings sentiment shifts, and whisper number clues.

3. Analyze Call Transcript (Post-Release)

get_financial_news(topic="AAPL earnings call transcript summary management tone", max_results=10)

Score management tone:

• Confident: Specific numbers, guidance raised, "record revenue", "ahead of schedule"
• Cautious: Hedging, qualifiers, "headwinds", "cautious outlook", "monitoring closely"
• Evasive: Deflecting analyst questions, pivoting to unrelated metrics -- most bearish signal

Key signal: tone shift vs prior quarter. "Confident" to "Cautious" is a red flag even if they beat.

4. Score and Decide

Rate on three dimensions: EPS (beat/meet/miss), Revenue (beat/meet/miss), Guidance (raised/maintained/lowered). Combine with management tone and whisper number assessment for the final signal.

Key Rules

• NEVER hold full position size through earnings -- reduce by at least 50%
• NEVER ignore the whisper number -- most "irrational" post-earnings moves are explained by whisper vs consensus gap
• NEVER rush entry after release -- wait for initial volatility to settle (1-2 hours minimum for large caps)
• "Buy the rumor, sell the news" applies frequently: stocks run up into expected good earnings, then sell on the actual news even on a beat
• If analysts press hard on a topic during Q&A and management deflects, that area is likely weak
• Best post-earnings drift setups: large EPS beat (>10%) + raised guidance + confident management tone

Related Skills

• sentiment-analysis -- Whisper number estimation via sentiment
• economic-calendar-trading -- Macro events near earnings amplify volatility

Source & license

This open-source skill is cataloged on AgentStack and links to its original source — we do not rehost the code.

• Author: SKE-Labs
• Source: SKE-Labs/agent-trading-skills
• License: Apache-2.0

Install and usage instructions live in the source repository linked above.