Since i begun trading, the 1 thing that has always infuriated me is Earnings Season and the accompanying frustration that it usually brings - not least because i would take positions a few days prior to the Earnings release on stocks that would produce incredibly good results vs Wall Street forecasts and then I would still watch the stock price plummet for no good or justifiable reason. If you play Earnings reports or HAVE played them in the past - you know what I'm talking about.
The reality of adding positions a couple of days before an Earnings report - is that you're playing with Vegas odds. Vegas odds are NOT attractive. Too many times we see companies crush it, but the price still tanks and too many times have I seen near misses, and the price moves up in cruise control. There is no real way to predict how the market will react to both the Earnings and the Guidance for the following quarter. It's gambling... pure and simple gambling and if you like gambling - you're probably better off playing Bingo or taking a trip to Vegas, because you will NEVER be a successful Trader playing Earnings reports. Sure you might have a couple of HUGE wins, but over the course of time - just like Vegas - you'll end up broke. The House always wins.
The good news is - there's a way to be profitable - the bad news is - you won't get the adrenaline rush.
The tactic is simple - to be a profitable Trader - DO NOT enter into positions in the days leading up to an Earnings report. (i have a rule where I will not take a new position 10 days prior to the company Earnings Report)
The way you CAN be profitable is to identify good trending stocks that are reporting each day, and simply wait and see how they report and then WAIT for the market reaction and how price performs.
What you are looking for is an already trending stock that reports positive earnings across ALL metrics (or even a near miss) but yet somehow Wall Street has found a way to tank the share price down.
Make sure the stock is 10% In profit if you are holding through (Price % NOT Options %) and DO NOT buy in the week leading up to Earnings either.