Navigating earnings season

After this lesson you'll treat the reporting calendar as a first-class input — and you'll have a written policy for the hold-or-fold question.

The season

Four times a year, within a few concentrated weeks, most listed companies report their quarterly results: mid-January into February, then April–May, July–August, October–November, with the banks traditionally opening each round. For a trader the season behaves like weather you get a forecast for. It's scheduled, you can map it, and it carries most of the year's single-stock gap risk (School II, course 6). Everything in this course follows from one property you've known since School I: the results are unknowable in advance, and the timing is fully known.

The season interacts with every layer of your method. Individual positions carry binary nights, and the scenario drill of School VI, course 5 exists largely for these weeks. Group theses get audited in public, because one bellwether's report moves its whole group (School IV, course 4), so a semiconductor position of yours reacts to its rival's numbers as well, and the calendar lets you see that coming. The season in aggregate is also a regime input: when the market punishes good reports (School I course 8's expectations game running hot), the tape is telling you what's already priced in, and the distribution-day count (School IV, course 5) tends to do its clustering here.

The hold-or-fold policy

Here's the recurring decision. You hold a position with +2R of open profit, and it reports Thursday night. Hold through, or step aside? This Academy's position is that either answer can be right, and that the answer should come from a policy you wrote while calm (School VII's one trick again) rather than from whatever you settle on Thursday afternoon. The policy weighs three inputs.

The cushion. Open profit works as a shock absorber. A freerolled position (School V, course 4: partials banked, stop at breakeven or better) can hold through a bad gap and still finish the trade at worse-than-nothing in the worst case versus its banked gains. On a fresh full-size position there's nothing absorbing anything, and a bad gap lands on the account in full, at multiples of R.

The size against the gap-case. School VI course 5's arithmetic, per position: price the realistic bad gap for this name's volatility class. If the answer threatens more R than you'd knowingly spend on one night, the position size through the night is wrong — trim to the size whose gap-case you accept, which may be zero.

The regime's mood toward reports. In seasons where beats are being sold (expectations stretched), the hold-through bar rises for everything.

A defensible beginner's policy, written out: fresh positions (no banked profit) are not held through reports at full size — trim or exit; freerolled positions may hold; every hold-through gets its gap-case priced in the journal beforehand. Refine it with your own journal data as campaigns accumulate (School V's loop). Have it in writing before your first season, and let the calendar column in your journal show that you checked.

Check yourself

1. Why does your position react to a competitor's report? (Group theses are audited by proxy — the bellwether's numbers reprice the whole group's story. The calendar makes this foreseeable.)
2. A fresh 1R position and a freerolled one both face reports tonight. Apply the policy. (The freeroll holds if its priced gap-case is acceptable against banked gains; the fresh position trims or exits — no absorber, gap lands at full multiple on the account.)
3. What regime information does the season broadcast? (How results are received — beats sold into means stretched expectations; distribution clustering here is the classic tell.)

The idea this lesson installs

The dates are public; being surprised by an earnings night is a choice.

Next: Course 4 — "IPOs and new-issue cycles," which closes the curriculum's taught schools.