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I’ve been fine-tuning a strategy that’s caught my attention lately, and it’s all about patience and timing around earnings season.
Look, I think the safest play over the next two, four, six, eight weeks is if we see moves up to the expected levels in earnings, I want to fade that move.
It’s not about being a perma-bear or fighting momentum — it’s about understanding probability and positioning for the inevitable correction that follows most earnings pops.
Here’s what I mean by that…
Using Tesla (TSLA) as an example ahead of earnings, which came after the close Wednesday, I calculated a 13% expected move, about $43 from $332, projecting potential moves to $376. The beauty is in the asymmetric setup this creates.
The Risk-Reward Mathematics That Matter
My strategy involves selling bear call spreads at these elevated levels, targeting credits of $3-3.50 while only risking $1.50, creating a 2.3:1 reward-to-risk ratio.
This isn’t just throwing darts at a board — it’s calculated.
The key insight here is waiting for the earnings pop to get better fills. If Tesla gaps higher, I get filled at even better credits with less risk. Tesla could run to $400, and I’d still collect my target — maybe even more.
The strategy requires calculating historical earnings moves going back 10, 12, 15 earnings prints to determine average expected moves, then positioning credit spreads with more reward than risk.
It’s about doing the homework first.
Why This Works in the Current Environment
The thesis is simple but powerful…
If the broader market goes down, I don’t care what’s up in earnings — it’s probably going to fall and fade and fill some gaps. Individual stock strength rarely holds when the broader market turns.
I tried this approach with banks and Netflix (NFLX) recently but didn’t get filled because they faded immediately rather than popping first. That’s actually validation of the concept — when stocks don’t pop on earnings, there’s nothing to fade.
The sweet spot is when Magnificent 7 names gap higher on earnings, giving us that premium credit opportunity before gravity takes over. If I’m right, I have the potential to make $350. If I’m wrong, I’m only risking $150.
That’s the kind of asymmetric opportunity I’m looking for in this market environment.
I’ll see you in the markets.
Chris Pulver
Chris Pulver Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
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The profits and performance shown are not typical, we make no future earnings claims and you may lose money. The results shown are from a backtest on 550 trades. The result was a 97.1% win rate, 17% average return (winners and losers) with an average hold time of 11 days. From 9/30/24 – 7/15/25 on 89 live trades, the win rate is 91.7%, 16% average return, with an average hold time of 11 days.
