Earnings season is upon us but what does that mean? In my experience, many traders are caught off-guard each time earnings reports start hitting the street because they are often accompanied by unexpected volatility in their stocks. An earnings report is relatively easy to anticipate, are publicly accessible and are one of the ways that traders can find out more about the company they are interested in. Plus, as you will see in the video on Using Options to Trade Earnings, earnings announcements provide a great option trading opportunity.

An earnings report is provided by a public company four times per year and summarizes performance, strategy and corporate changes that have taken place over the last 3 months. This report is filed with the SEC within 35 days of the end of the quarter and is usually available from just about any financial news portal site and from the company's website. The quarterly report is usually accompanied by an earnings conference call streamed over the internet and often includes a PowerPoint presentation to summarize the highlights.

Typically, earnings reports are released in the month following the end of the last fiscal quarter. That means that mid January, April, July and October is a quarterly earnings season with large groups of stocks reporting results each day for a couple weeks. That increased flow of information coming from each company creates some fast price movement. The volatility that accompanies an earnings report can be disruptive to some investors because it is not uncommon for prices to gap just following the news release in between market sessions. You can see in the chart below a very large move following an earnings report on Google (GOOG.)

To learn more, click here to watch the video on Using Options to Trade Earnings