Four times a year US companies publish their quarterly results, and for a few weeks their share prices move more than at any other time. Most large companies report outside the regular trading session, before the open or after the close, so the first price after results often opens well away from the last one. For stock CFDs that normally trade only in the cash session, that gap is the main risk of holding a position through earnings.
Key takeaways
- US earnings season starts about two weeks after each quarter ends, led by the large banks, and is busiest over the following three to four weeks.
- Most large companies report before 09:30 or after 16:00 New York time.
- The share price reacts to the gap between results and expectations, and especially to guidance for the next quarter.
- The options market’s “implied move” shows how large a reaction traders expect.
- A stop-loss does not protect against a gap: it fills at the first available price.
| Seasons | Mid-January, mid-April, mid-July, mid-October, running about six weeks |
|---|---|
| Usual reporting times | Before the open (around 07:00–09:00 New York) or after the close (16:00 onwards) |
| What moves the share | Results vs expectations, and guidance |
| Typical post-earnings move | Often several per cent in a day, far larger for some shares |
| Stock CFD hours at Marketsall | Shown in the symbol specification in MetaTrader 5 |
When is earnings season?
| Quarter reported | Season starts | Busiest weeks |
|---|---|---|
| October–December (Q4) | Mid-January | Late January to mid-February |
| January–March (Q1) | Mid-April | Late April to mid-May |
| April–June (Q2) | Mid-July | Late July to mid-August |
| July–September (Q3) | Mid-October | Late October to mid-November |
Large banks traditionally open each season. The biggest technology companies report in the busiest weeks, and because they carry so much weight in the indices, their results move the US500 and Nasdaq 100 as well as their own shares. The concepts are explained in what an earnings report is and what earnings season is.
Why do stocks gap after earnings?
A share price is a forecast of future profits. Results change that forecast all at once. When a company reports after the close, the new information is priced immediately in after-hours trading, where volume is thin, and the regular session opens at the new level. There is no trading in between, so there are no prices in between. A stop-loss set below the old price is filled at the new opening price. This is gap risk; the limits of stops are covered in does a stop-loss always protect you.
| Element | Why it matters | Common surprise |
|---|---|---|
| Earnings per share vs forecast | The headline number most coverage leads with | Beating the forecast by a small amount is normal and often ignored |
| Revenue vs forecast | Harder to flatter than profit | A revenue miss can outweigh an earnings beat |
| Guidance | Management’s outlook resets expectations for the next quarter and year | Cautious guidance often sends shares down despite good results; see earnings guidance |
| Margins and key metrics | Shows the quality of the result | Subscriber numbers, data-centre sales, same-store sales |
| The conference call | Comments can change the first reaction | Moves often reverse during the call |
What is the implied move?
Options traders price in how far they expect a share to move after results. The combined price of the at-the-money call and put that expire just after the report, divided by the share price, gives a rough estimate of the expected move in either direction. If a $200 share has options implying $12, the market expects a move of about 6%, up or down. Actual moves are often larger or smaller; the implied move is a guide to the size of the risk, not to its direction.
| Input | Value |
|---|---|
| Share price | $200 |
| At-the-money call, expiring after results | $6.20 |
| At-the-money put, expiring after results | $5.80 |
| Sum (straddle price) | $12.00 |
| Implied move | $12 ÷ $200 ≈ 6% in either direction |
Three ways to approach a position before results
| Approach | What it involves | Main risk |
|---|---|---|
| Close before results | Take the position off before the report | Missing a favourable move |
| Reduce size | Keep a smaller position so a gap of the implied size is affordable | Still exposed to a larger-than-expected gap |
| Hold unchanged | Accept the gap risk in full | A gap of several per cent through the stop level |
Size positions from the move you could absorb, using the implied move as a minimum rather than a maximum. See position sizing and how leverage increases trading risk. Why prices can jump even on good news is explained in why stocks move so much after earnings and why good news can make markets fall.
What it costs to trade US stock CFDs as a CFD
A stock CFD tracks the share price; no shares are owned and there are no voting rights. See what stock CFD trading is.
| Cost | When it applies | Note for US stock CFDs |
|---|---|---|
| Spread | Every trade | Often wider at the open after results |
| Commission | May apply to stock CFDs | Shown in the symbol specification in MetaTrader 5 |
| Swap / overnight financing | Positions held overnight | Daily; holding through a whole season adds up. |
| Dividend adjustment | When the share goes ex-dividend | Long positions usually credited, short positions debited. |
| Slippage | Gaps and fast markets | Stops fill at the first available price after results |
Key risks
Earnings gaps. The most important risk; stops cannot prevent them.
Guidance surprises. Good results with cautious guidance can still send shares down sharply.
Index spillover. Results from the largest companies move whole indices.
Leverage. A 10% gap on a leveraged position can remove a large part of the account.
Risk warning. Trading CFDs carries a high level of risk since leverage can work both to your advantage and disadvantage. As a result, the products offered on this website may not be suitable for all investors because of the risk of losing all of your invested capital. You should never invest money that you cannot afford to lose, and never trade with borrowed money.
How to trade US stock CFDs at Marketsall
Stock CFDs are available on MetaTrader 5 and Web Trader. The stock CFDs available are listed, with live prices, on the Stocks page; their symbols carry a market suffix, for example NVDA.US. Read the symbol specification for contract size, margin and swap rates before a first trade; how to read contract specifications on MT5 shows where they are. Practise on a demo account first, keeping in mind the differences covered in demo vs live accounts, and set the position size before opening the ticket with position sizing.
Frequently asked questions
When is earnings season?
US earnings season starts about two weeks after each quarter ends, in mid-January, mid-April, mid-July and mid-October, and lasts around six weeks. Large banks usually report first, and the busiest period is the second to fourth weeks.
Why do stocks gap after earnings?
Most large companies report outside regular trading hours. The results are priced in after-hours trading, and the regular session opens at the new level with no trading in between. The share price jumps, or gaps, rather than moving through the intermediate prices.
What is the implied move for earnings?
The implied move is the size of the post-earnings move that the options market expects. It is roughly the price of the at-the-money call plus the at-the-money put expiring just after the report, divided by the share price. It indicates the expected size of the move, not its direction.
Does a stop-loss protect me during earnings?
Not from a gap. A stop-loss becomes a market order when its level is reached, and if the share opens beyond that level after results, the order is filled at the first available price, which can be far worse than the stop level.
Why do shares fall after good earnings?
Share prices reflect expectations. If results beat forecasts by less than investors hoped, or if the company’s guidance for the next quarter is cautious, the shares can fall even though the results were good in absolute terms.
Related reading
Trimming size before a report
Taking the reduce-size route? The walkthrough on partially closing a trade on MT5 covers the steps, and why an order fills at another price is worth reading before the results land.
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