Helpful Email Reminders

I received an email from Seeking Alpha that was a helpful reminder. The email was focused on “Earnings week ahead: AMZN, GOOG, PLTR, AMD, PFE, DIS, PYPL, ABBV, QCOM, SMCI, MRK, PEP, UBER, PM, and more.” It didn’t take me long to spot investments I own in this list, including, AMZN, PFE, PYPL, ABBV, SMCI, and MRK. The article talked about the “high-impact week ahead.”

“Earnings season rolls into a high-impact week ahead, with results due from a broad cross-section of the market spanning Big Tech, semiconductors, healthcare, energy, consumer, REITs, and financials.” – SOURCE: Seeking Alpha

When investors and options traders see the earnings reports, they either buy more of the company, do nothing, or sell their investment in the company. For that reason, when an earnings date falls during the current week, I generally avoid trading options contracts. The reason is quite simple. If the news is extremely good, a covered call option might cause me to sell my shares at a price far below the price investors are willing to pay after the earnings are announced.

In the same way, if the news is bad, then selling a cash covered put option might cause me to overpay for the 100 shares of stock the contract obligates me to purchase.

One Example: SMCI

Super Micro Computer, Inc. is scheduled to announce earnings tomorrow (02/03/2026) after the market closes. This is known as “Post-Market.”

On January 28 I sold a put contract in my ROTH IRA for SMCI (-SMCI260130P30.) On Friday the shares traded below $30, so I was assigned the shares and paid $3,000 for the shares. The shares are currently trading at $30.24 per share, so I could sell my 100 shares and make a small profit.

However, because earnings will be announced tomorrow, I don’t want to sell, and I also don’t want to enter a covered call option contract. Any profit I might make from the options contract could be dwarfed by the dollars I might receive if the earnings report drives the price of SMCI shares higher. Of course, a bad report could drive the share price down, causing me to have a loss if I panic and sell.

SMCI’s QUANT Rating

This is not a low-risk investment. The current Seeking Alpha QUANT rating of SMCI is 1.78 (SELL), so most investors would sell their shares when the rating is that poor.

Therefore, if you don’t own shares of SMCI, this is not a recommendation to buy shares. Rather, it is a reminder to pay attention to earnings dates when considering buying shares and when trading options.

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