My Top 2 Earnings Picks For This Earnings Season

This morning, I woke up to the sound of pounding rain on the roof of my bus and a generator that made me decide to take the day off. Add in some flash flooding, a Wi-Fi signal riding on Starlink, and it's already been a day to remember.

But even with all that going on, I had to get a story out to you because we've officially entered one of my favorite times of the year: earnings season.

This isn't just any earnings season, either. It's the second quarter (Q2) earnings, when the biggest batch of reports hits. But while most traders are busy guessing whether a stock will beat or miss expectations, we're going to take a different approach.

So today, I want to walk you through how I'm trading earnings this quarter, the patterns I'm spotting, and the stocks I've got on my radar right now.

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Why Most Traders Blow It on Earnings

Let's get something out of the way: trading earnings the day before the announcement is a bad idea.

That's what I call "meme trading" or the "Robinhood crowd" mentality. You buy a call because you hope the stock will go up—or a put if you think it'll tank—and hold through earnings. That's a quick way to lose money, even if you're right on direction.

Why? Because of the volatility crush.

Implied volatility usually surges leading into earnings. But once the report drops? Volatility falls off a cliff—often faster than the stock price can move in your favor. That means even if you're "right," you can still lose money because the time premium gets obliterated.

So, what's the better play? Trade the setup, not the outcome.

That means you want to get in one to two weeks before earnings, not the day before. And you want to get out before the report hits, selling to someone else who's willing to pay top dollar for all that pumped-up volatility.

I call it "scalping the implied volatility wave."

Now, if I can pair that volatility ramp with a strong directional pattern, that's where the real edge comes in. Some stocks tend to drift higher (or lower) into earnings like clockwork. And when price and volatility rise together, that's our signal to strike, which brings me to a few setups I've got my eye on.

Pan American Silver

I've been watching Pan American Silver (NYSE:PAAS) for a while. Over the last four quarters, PAAS has sold off in the week leading up to earnings, and each time, implied volatility has spiked. That's a textbook setup for put buyers.

Now, earnings aren't coming until August 6, but that gives us time to prepare. I'll be watching closely for the next dip and any IV surge. If we see both, I'll be looking to grab short-term options and ride them for a few days before the announcement.

AbbVie

AbbVie (NYSE:ABBV) is the opposite of PAAS. This one has a bullish pattern leading up to earnings, with the stock moving higher ahead of the last few reports. Same deal—volatility ramps, price climbs, and that creates a sweet spot for call options.

Earnings drop on July 30, so again, we've got time. I'll be eyeing this one about 10 days out, especially if we see any early pullbacks that offer a cheaper entry.

Why This Matters And What To Do Next

A lot of traders think earnings are binary: either the stock beats expectations and pops, or it misses and crashes. But that's not how the smart money trades.

We're not gambling on outcomes, we're stacking probabilities.

We're looking for patterns that have played out multiple times, we're aligning with the natural volatility cycle, and we're getting out before the crowd even shows up.

Remember, I track the top 325 stocks every quarter to find these patterns. PAAS and ABBV are just two names with strong historical setups—but they're not the only ones. The more you study these moves, the easier it gets to spot consistent winners.

This week, I'll be running more scans and breaking down a few ETF setups as well (seasonality is back in play). And of course, I'll be keeping one eye on the headlines. After all, even a strong earnings setup can get shaken up by the 24/7 news cycle.

Until then, keep your watchlists tight, your entries clean, and your exits earlier than everyone else.

Editorial content from our expert contributors is intended to be information for the general public and not individualized investment advice. Editors/contributors are presenting their individual opinions and strategies, which are neither expressly nor impliedly approved or endorsed by Benzinga.

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