My Earnings Season Playbook: How to Trade Big Tech Reports Like a Pro

by | Jan 27, 2025

The markets are reeling today after a seismic shift out of China. DeepSeek, a Chinese AI startup, has unveiled a free, open-source AI model poised to rival OpenAI’s ChatGPT.

This unexpected move has sent shockwaves through the tech sector, with U.S. futures and Asian shares (excluding China) taking a hit as investors reassess the landscape. The Nasdaq is down 3.4% and the S&P 500 1.9% with just two trading hours to go.

This development raises serious questions about U.S. tech dominance and valuations. And in response, tech stocks are tumbling.

Nvidia, a key player in the AI space, has seen its shares plunge 17%. The ripple effect is evident globally, with significant declines also hitting companies like ASML Holding (ASML) in Amsterdam and SoftBank in Tokyo.

We discussed this at length today during an emergency roundtable — stay tuned for a link to watch the replay.

That said, with some of the heaviest hitters in the market — Meta (META), Microsoft (MSFT), Tesla (TSLA), and Apple (AAPL) — set to report this week, let’s dive into earnings season.

Add to that Starbucks (SBUX) and Visa (V), and you’ve got a week loaded with market-moving events. This isn’t just any earnings season…

It’s the kind of week where prepared traders can find serious opportunities.

When trading earnings, the first thing to understand is that these events are inherently volatile. Stocks can swing significantly based on the market’s reaction — sometimes far more than the expected move priced into options.

This volatility is where traders like us can find an edge, provided we approach these trades with a well-thought-out plan.

For high-probability trades during earnings, I like to focus on strategies like iron butterflies or broken wing butterflies. These setups allow me to profit within a specific range while defining my risk upfront.

For instance, with a stock like Netflix (NFLX), we recently saw the expected move come in at 10% but deliver an impressive 15% rally instead. By trading both sides with defined-risk strategies, I was able to walk away with a profit regardless of direction.

This week’s lineup brings plenty of opportunities.

Meta and Microsoft, both part of the Communication Services and Information Technology sectors of the S&P 500, will likely set the tone for their respective industries. Tesla is another one to watch closely — all three report after the close Wednesday.

TSLA thrives on volatility, and with its recent moves, earnings could either send it ripping to new highs or plunging to fill gaps.

As always, it’s not just about picking the right trades…

It’s about managing your risk. Earnings season is a high-stakes game, and while the potential for profit is exciting, every trade needs to account for worst-case scenarios. That’s why I stick to defined-risk setups — I know exactly what’s on the line before I enter the trade.

If you’re ready to make the most of next week’s action, make sure your trading plan is tight, your strategies are proven, and your risk is under control. Earnings season is a wild ride — but with the right approach, it can also be one of the most rewarding times of the year.

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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