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Earning Your Keep

April 1, 2014

Spring is here, when a trader’s fancy turns to ... earnings. With U.S. corporations poised to unleash a slew of quarterly results in coming weeks, Trade Architect® offers several tools to help you study up and make sense of the inevitable cascade of numbers.

Access to timely information is the name of the game when it comes to trading and investing. This is especially true during earnings season, as uncertainty surrounding a company’s quarterly performance can increase the volatility of its stock price. Volatility, like fear, can be used as fuel to drive successful results when we have the proper information and action plan.

So where can an investor turn to stay in the know? The answer is quite simple: Trade Architect.

Trade Architect® is TD Ameritrade’s web-based platform for serious investors who want to trade stocks, as well as execute single and multi-leg options strategies. The platform offers custom charting, sector performance “heat maps,” streaming news from CNBC, and other tools to help you visualize your strategy, spot potential opportunities, and take action.

Here are three tips to help you navigate what will surely be an opportunity-filled earnings season:


Check what’s coming up next with the Trade Architect intuitive event calendar (see figure 1). Use it to filter for stock symbols with upcoming earnings and view a company’s consolidated earnings-per-share estimate. This tool also provides the high and low analyst estimate, which allows you to gauge the difference in opinion among analysts. You can even find conference call information if you want to dial in and hear what company executives have to say after they announce quarterly results.


FIGURE 1: TIME FOR THE MAIN EVENT. The Trade Architect calendar function offers a quick and easy means to track earnings announcement dates, as well as other corporate events, such as dividend payments and conference calls. For illustrative purposes only.


After identifying an upcoming earnings opportunity, the next step is to head over to the Research section, under the Trade tab, and do your homework (see figure 2). Enter your ticker symbol to assess the general earnings trend for the past several quarters and evaluate analysts’ projected profit growth for the next several quarters.

(Hint: Read third-party, independent research reports, which are available directly to the right of the earnings graph. Industry, sector, and company analysis from sources including and S&P Capital IQ are available in a convenient one-click location.)


FIGURE 2: HOMEWORK ASSIGNMENT. The Trade Architect Research page provides tools to illustrate a companys estimated/actual results and industry analysts ratings on the stock. For illustrative purposes only. Source: TD Ameritrade.

Hit the Books!

Study up for another quarterly earnings season with the Research functions on Trade Architect.


Earnings releases can cause volatility in a company’s stock price, which is why it’s important to have a well-thought-out plan. It’s time to crunch some numbers.

Stock and option traders may find the Probability Analysis chart study valuable for crafting quantifiable trading strategies rooted in statistical probability (see figure 3). This tool applies option pricing information to display a “cone” that represents 68% of expected price distribution and another representing 95%.


FIGURE 3: WHAT ARE THE ODDS? Use the Probability Analysis tool on Trade Architect to get a sense of how much a stock price may move based on statistical models. For illustrative purposes only. Source: TD Ameritrade.

Some stock traders may find this helpful for determining realistic price targets and for setting stop orders to keep out of the way of unexpected moves. Some option traders may find this helpful in selecting high-probability strike prices for their option strategies.

Whether you are considering a covered call, a “collar,” or any other options-based strategies designed to help protect your positions against sharp price swings, the Probability Analysis study can provide information you simply can’t get as easily elsewhere.

Following these steps can help keep you sharp and focused this earnings season. Happy trading!

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