4.4.8
Saal mein chaar baar, har public company ko apni "books kholni" padti hain aur report dena hota hai ki usne kitna paisa kamaya. Isse earnings season kehte hain. Soch isko companies ke liye ek school report card day ki tarah — lekin log grades announce hone se pehle hi bet lagate hain, aur jab real grades aate hain toh stock bahut violently move karta hai.
YE KYUN MATTER KARTA HAI: Ek akela earnings report ek stock ko seconds mein 10–20% move karwa sakta hai. Ye unhi chhand moments mein se ek hai jab kisi company ke fundamentals directly aur instantly market price se takraate hain. Agar tujhe earnings calendar nahi pata, toh tu blindsided ho sakta hai.
Definition Earnings SeasonWoh period, jab har calendar quarter khatam hone ke 2–6 weeks baad , majority public companies apne quarterly earnings reports release karti hain. US mein ye cluster hote hain mid-January, mid-April, mid-July, mid-October ke aaspaas.
Definition EPS (Earnings Per Share)EPS = Weighted Avg Shares Outstanding Net Income − Preferred Dividends per single share batata hai, taaki alag-alag size ki companies ko fairly compare kiya ja sake.
EPS kyun, total profit kyun nahi? Ek company $1 billion kama rahi hai toh bada lagta hai, lekin agar uske 10 billion shares hain, toh har share ne sirf $0.10 kamaya. EPS share count se normalize karta hai taaki tum apples to apples compare kar sako.
Earnings se pehle ka stock price already market ka results ka andaaza contain karta hai. Analysts ek consensus estimate publish karte hain. Report day pe move is baat se nahi hoti ki earnings achi hain ya buri, balki is baat se hoti hai ki expectations ko beat kiya, meet kiya, ya miss kiya .
Ek company record profits post kar sakti hai aur phir bhi crash ho sakti hai — agar usne expected se kam kamaya.
Earnings se pehle uncertainty zyada hoti hai, isliye implied volatility (IV) — market ka expected move size — pumped up hota hai. Option prices expensive hoti hain. Jis moment number aata hai, uncertainty gayab ho jaati hai: isse IV crush kehte hain. Stock ek naye price pe jump karta hai aur option premiums collapse kar jaate hain.
Worked example Example 1 — Beat kiya lekin phir bhi giraAnalysts expect karte hain EPS of $1.50 . Company report karta hai $1.55 .
Surprise = 1.50 1.55 − 1.50 × 100 = + 3.3% Kyun? Ye step kyun: humne surprise compute kiya — ye ek beat hai. Lekin agले quarter ke liye guidance weak thi, aur IV crush + profit-taking ne hit kiya. Lesson: headline beat sirf aadhi kahani hai; forward guidance aksar zyada matter karti hai.
Worked example Example 2 — Straddle trade ko size karnaStock = $200, IV = 60% (annualized), aaj raat earnings, T = 1 Expected Move = 200 × 0.60 × 365 1 Ye step kyun: expected-move formula mein plug karo. Compute 1/365 = 0.05234 = 200 \times 0.60 \times 0.05234 = \ 6.28 \approx \pm 3.1%$$
Ye kyun matter karta hai: agar tum straddle $6.28 se kam mein khareed rahe ho, market move ko underpricing kar rahi hai; agar zyada cost karta hai, toh tumhe break even ke liye expected se bada move chahiye.
Worked example Example 3 — Negative estimateLoss-making startup: consensus EPS = −$0.20 , actual = −$0.10 .
Surprise = ∣ − 0.20∣ − 0.10 − ( − 0.20 ) × 100 = 0.20 0.10 × 100 = + 50% Ye step kyun: denominator mein absolute value sign ko meaningful rakhti hai — company ne expected se kam lose kiya, ye ek genuine positive surprise hai, aur stock aksar rally karta hai.
Common mistake "Achi earnings = stock upar jayega."Ye sahi kyun lagta hai: intuitively, zyada profit ka matlab zyada value hona chahiye. Flaw: price pehle se hi expected profit price in kar chuki hoti hai. Sirf expectations ke relative surprise se hi move hoti hai. Fix: hamesha actual vs. consensus compare karo, aur guidance padho.
Common mistake "Bade move ke liye earnings se pehle options khareedlo."Ye sahi kyun lagta hai: tumne sahi se ek bada move predict kiya. Flaw: IV crush option ki value us instant deflate kar deta hai jab results aate hain, chahe tumne direction sahi call kiya ho — tum sahi ho kar bhi lose kar sakte ho. Fix: IV collapse ko account karo; long straddle pe profit ke liye stock ko expected move se zyada move karna hoga.
Common mistake "Report market hours ke dauran aati hai."Ye sahi kyun lagta hai: zyaattar news aisi hi hoti hai. Flaw: zyaattar US earnings before the open (BMO) ya after the close (AMC) drop hoti hain, isliye move tab hoti hai jab tum regular session trade nahi kar sakte , jo tumhe overnight gaps ke samne expose karta hai. Fix: report time check karo; close se pehle risk manage karo.
Earnings season kya hota hai? Har quarter ka ~2–6 hafte ka window jab zyaattar public companies quarterly earnings reports release karti hain (US mein mid-Jan/Apr/Jul/Oct).
Post-earnings price move actually kya drive karta hai? Consensus estimate ke against surprise (beat/meet/miss + guidance), raw profit number nahi.
EPS formula likho. EPS = (Net Income − Preferred Dividends) / Weighted Avg Shares Outstanding.
Earnings surprise formula likho. (Actual EPS − Consensus EPS) / |Consensus EPS| × 100%.
IV crush kya hai? Jab earnings uncertainty resolve ho jaati hai toh implied volatility (aur option premiums) ka achanak collapse.
Expected-move formula mein √T kyun hai? Price variance linearly time ke saath badhti hai, isliye standard deviation (move size) √time ke saath badhti hai — Brownian-motion ki pehchaan.
Options se expected move quickly estimate kaise karte hain? Ye ≈ at-the-money straddle ki price hoti hai (current strike pe call + put).
BMO aur AMC ka kya matlab hai? Before Market Open aur After Market Close — earnings release ke do common times.
Kya tum direction pe sahi hokar bhi long option pe lose kar sakte ho? Haan — IV crush premium ko itna deflate kar sakta hai ki directional move se zyada ho.
Total net income ki jagah EPS kyun use karte hain? EPS profit per share normalize karta hai taaki alag-alag size ki companies comparable hon.
Recall Feynman: 12-saal ke bachche ko samjhaoSocho class ke har bachche ko saal mein 4 baar apna report card dikhana hota hai. Report card day se pehle, sab bet lagate hain ki tumhara kya grade aayega. Agar sabne bet lagaaya ki 90 aayega aur 92 aata hai, log khush hote hain — lekin sirf thoda , kyunki unhone almost sahi guess kiya tha. Agar 70 aaya, toh jinlogon ne zyada pe bet lagaaya tha woh shock ho jaate hain aur tumhe chodh dete hain. Toh surprise, na ki grade khud, logon ki excitement change karta hai. Aur jaise hi card dikhaya jaata hai, saari betting excitement ("shayad" ki energy) achanak gayab ho jaati hai — wahi vanishing excitement IV crush hai.
"BEG for Guidance" — earnings pe stock ko move karne waali 4 cheezein:
B eat/miss • E PS • G uidance • (aur IV crush se savdhaan raho) — aur yaad rakho BMO/AMC = reports B efore ya A fter aati hain, during nahi.
Implied Volatility & IV Crush Options Straddles & Strangles Consensus Estimates & Analyst Ratings Overnight Gaps & Pre-Market Trading Forward Guidance & Fundamental Analysis When to Trade — Timing & Sessions Random Walk & Brownian Motion of Prices
normalizes by share count
EPS = Net Income / Shares
Expected Move ≈ Price × IV × √of T/365