Lesson

Earnings quality scanner | Options Educator

Evaluate revenue quality, margin drift, and guidance revisions before trading.

In this lesson

What Are Earnings Reports?

  • Earnings = quarterly financial report card
  • EPS and revenue are the main numbers
  • Guidance often matters more than current results
  • It's about expectations, not absolute performance

Reading Financial Statements

  • Income statement = profitability over time
  • Balance sheet = financial position now
  • Cash flow = actual cash movement
  • Cash flow often more reliable than net income

Earnings Quality Analysis

  • Not all beats are equal - quality matters
  • Watch for one-time items inflating numbers
  • Cash flow should confirm reported profits
  • Compare receivables growth to revenue growth

Trading Earnings Events

  • IV spikes before earnings, crashes after
  • You can be right on direction and still lose
  • Selling options before earnings captures IV crush
  • Always compare premium to expected move

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