A sizeable number of companies are reporting earnings next week - none more closely watched than Nvidia, which is due to report on Feb. 25 after the market close.

As has become the norm, the near-term option straddles on Nvidia (NVDA) are predicting a far greater move than has historically been the case. Over the past 10 earnings reports, the median move of the stock has been 3.2% on the day after earnings are reported. The three most recent post-earnings moves were down 3.15%, down 0.78%, and up 3.24%. Yet the at-the-money straddle expiring on Feb. 27 - which is the option market's best indicator of what it expects the post-earnings move to be next week - is currently priced at around 7%. So the Nvidia earnings straddle is not a buy at these prices.

The possibilities for profit in next week's earnings cycle are found elsewhere. The table below shows some of the major stocks that are reporting earnings. This list is comprised of ones that have increased implied volatility. That is, the option market is expecting a potentially volatile move after the earnings news.

Our approach is to attempt to buy the shortest-term straddle possible (generally the one expiring on the Friday after the earnings reporting date) and to exit at the close of the first full day of trading after the earnings have been reported. For the stocks in this table, that would mean buying the straddles expiring on Feb. 27.

Specifically, the columns in the table (from left to right) are:

Date: The earnings reporting date,

Pm?: Whether the earnings are to be reported before the market opens ("N") or after the market closes ("Y")

Symbol: The stock symbol

Needed: The most that we would pay for that near-term straddle, with the price of the straddle expressed as a percentage of the underlying stock price. In reality, this is the percentage move that is smaller than six of the past 10 post-earnings moves in this stock. For example, the limit for a Nvidia straddle would be 3.15% of the stock price.

Optvol: the 20-day average of total option volume on this stock. Low numbers indicate a potentially illiquid situation.

Last week, we identified Lemonade (LMND) and Walmart $(WMT)$ as potential straddle buys. This week, the cheapest ideas - with the highest potential if the post-earnings moves are in line with the previous 10 earnings reports - are Ambarella $(AMBA)$, Snowflake (SNOW) and Urban Outfitters $(URBN)$. As an example, Ambarella is trading around $66. If the Ambarella (Feb. 27) straddle can be bought for about 15% of the stock price (the "needed" column in the above table), or roughly $10, then it would be attractive.

It is often the case that straddles become a bit cheaper as the earnings date approaches, so these are all worth monitoring as their earnings dates approach.

New recommendation: Baker-Hughes $(BKR)$

The July straddles on BKR (BKR) are an attractive purchase on this potentially volatile stock. In the past year, BKR has had a low of $33.60 and a high of $62.75. It has recently exploded to the upside, as the oil sector has been much in demand recently. It's up almost 20 points since mid-December.

This kind of action is attractive for straddle buyers. This stock could continue its upside run, or if might have a pullback toward support at $51. In either case, the straddles or strangles are selling for prices that are attractive for a five-month time horizon on what has become a pretty volatile stock.

Buy 1 BKR (July 17) 65 call and buy 1 BKR (July 17) 60 put for a combined price of $9 or less for the "strangle."

Stock chart for BKR showing price fluctuations from early 2023 to early 2026, with a significant increase towards the end.

Stock market insight: Stuck in the middle

The S&P 500 Index SPX, continues be unable to break out over 7,000 nor to fall below support in the 6,720-6,800 range. Both levels have recently been tested repeatedly and have held each time. Bears cite the similarity between current action and that of a year ago, when SPX was repelled from the 6,100 area several times and eventually broke down badly. The bulls are more encouraged by the heavy selling this week as SPX broke slightly below 6,800, but then support came back and the market rallied strongly.

Graph showing SPX values from around 4800 to 7200, with several "S" (sell) and "B" (buy) markers.

In an environment like this, it's not surprising that our indicators are mixed. Equity-only put-call ratios are solidly on sell signals, as they continue to rise. However, new 52-week highs on the NYSE continue to swamp new 52-week lows, so that indicator is bullish.

Illustration of the 21-day equity-only put/call ratio and the S&P 500 (SPX) index from January 2025 to April 2026.

Market breadth has improved since that last retest of the 6,800 area, and continued positive breadth would be bullish for our breadth oscillators - which currently are split, with the NYSE-based oscillator on a buy signal (NYSE breadth has been quite strong lately), while the "stocks only" oscillator is still on a sell signal currently.

VIX VIX is more problematic, in that it continues to generally rise - as it has been doing since late last year. Even here, there's a split in the indicator. The "spike peak" buy signal for the stock market, of Feb. 6, remains in place. However, the 20-day moving average of VIX is higher than its 200-day moving average, and VIX itself also remains above its 200-day moving average, so that is a trend of VIX sell signal (for stocks).

VIX chart showing volatility trends.

We're only going to get resolution when SPX breaks out or breaks down. This move likely will be significant, but for now the strategy that has worked best has been selling rallies to 7,000 and buying declines to 6,800 or so. We don't have any new confirmed signals at this time, but we will act when we do.

Follow-up action:

All stops are mental closing stops unless otherwise noted.

We are using a standard rolling procedure for our SPY SPY spreads. In any vertical bull or bear spread, if the underlying hits the short strike, then roll the entire spread. That would be roll up in the case of a call bull spread or roll down in the case of a bear put spread. Stay in the same expiration and keep the distance between the strikes the same unless otherwise instructed.

Also, for outright long options, roll if they become 8 points in-the-money.

Long 1 expiring TSEM $(TSEM)$ (Feb. 20) 140 call and short 1 TSEM (Feb. 20) 155 call: Continue to hold without a stop for now. Roll to the TSEM (Mar. 20) 140-155 call bull spread now. Roll up both sides, 15 points each, if TSEM trades at $155.

Long 1 BMO (Jun. 18) 130 call and long 1 BMO (Jun. 18) 130 put: Continue to hold this straddle. Roll the calls up if BMO $(BMO)$ trades at $150 and roll the puts down if it trades at $110.

Long 6 expiring AAL (Feb. 20) 15 puts: roll to the AAL (Mar. 20) 14 puts. We will continue to hold as long as the AAL $(AAL)$ put-call ratio is on this sell signal.

Long 1 expiring SPYM SPYM (Feb. 20) 81 call and long 1 SPYM (Feb. 20) 81 put: Sell this strangle now and do not replace it.

Long 1 expiring LH (Feb. 20) 280 call: roll to the LH (Mar. 20) 280 call. We will hold the call as long as the put-call ratio for LH $(LH)$ remains on a buy signal.

Long 3 expiring ERAS $(ERAS)$ (Feb. 20) 7.5 calls: Roll to the ERAS (Mar. 20) 12.5 calls. Raise the closing stop to $10.50.

Long 1 SPY (Feb. 27) 688 call and short 1 SPY (Feb. 27) 708 call: This is the position that was based on the "spike peak" buy signal of Jan. 21. The position was stopped out at the close of trading on Feb. 5, since VIX had risen more than 3.0 points, but a new "spike peak" buy signal is now in effect. Hold this position in line with the new "spike peak" buy signal of Feb. 6.

Long 1 SPY (Mar. 20) 692 put and short 1 SPY (Mar. 20) 652 put: This is the position based on the recent breadth oscillator sell signal. Market breadth has improved, so this position should be closed.

Long 2 CSCO (Mar. 20) 82.5 calls: CSCO $(CSCO)$ fell sharply after its earnings were reported Feb. 11, but the momentum was strong coming into this earnings report so we are going give it the benefit of the doubt: Set a trailing closing stop at $78.

Long 1 SPY (Mar. 20) 688 call and short 1 SPY (Mar. 20) 708 call: The trading system that we have built around these spike peaks calls for holding the position for 22 trading days (about a month), but it would be stopped out if VIX were to close above 23.10 - its most recent peak.

All stops are mental closing stops unless otherwise noted.