---
title: "How Do the Post Earnings Jump and Drop Scans Work?"
slug: "how-do-the-post-earnings-jump-and-drop-scans-work"
updated: 2021-10-15T01:14:38Z
published: 2021-10-15T01:14:38Z
canonical: "learn.trademachine.com/how-do-the-post-earnings-jump-and-drop-scans-work"
---

> ## Documentation Index
> Fetch the complete documentation index at: https://learn.trademachine.com/llms.txt
> Use this file to discover all available pages before exploring further.

# How Do the Post Earnings Jump and Drop Scans Work?

**What Do the "1 Day After Earnings Jump, Long Call" and "1 Day After Earnings Drop, Long Put" scans do?**

These are two scans which look for the same thing -- a pattern of continued stock movement within a short window of time right after an abrupt stock drop or stock rise off of an earnings result.

**1 Day After Earnings Jump, Long Call** Pattern recognition is critical to option trading. One of the many patterns we scan for is best seen in Apple. Here's what it looks like, at a glance:

![image.png](https://cdn.document360.io/b73389a5-b202-4bf4-8df2-8c69e8edbb3b/Images/Documentation/image%2817%29.png)

**THE PATTERN** If you've ever seen a stop rip off of earnings and wondered if that was a signal for a trade, or if the momentum would continue, then this is exactly the back-test you are after. We call it "star gazing" when a stock rips and we're stuck -- with no idea what to expect next.

If the stock move immediately following an earnings result was large (3% or more to the upside), if we test waiting one-day after that earnings announcement and then bought a three-week at the money (50 delta) call, the results can be quite strong.

We can test this approach without bias with a custom option back-test. Here is the timing set-up around earnings: ![image.png](https://cdn.document360.io/b73389a5-b202-4bf4-8df2-8c69e8edbb3b/Images/Documentation/image%2818%29.png)

**Rules**

- Condition: Wait for the one-day stock move off of earnings, and if it shows a 3% gain or more in the underlying, then, follow these rules:
- Open the long at-the-money call one-trading day after earnings.
- Close the long call 14 **calendar days** after earnings.
- Use the options closest to 21 days from expiration (but more than 14 days).

This is a straight down the middle direction trade -- this trade wins if the stock is continues on an upward trajectory after a large earnings move the two-weeks following earnings and it will stand to lose if the stock does not rise. This is not a silver bullet -- it's a trade that needs to be carefully examined.

But, this is a conditional back-test, which is to say, it only triggers if an event before it occurs. Example You can read a full example, looking at Apple, here: [Pattern Identification: How to Trade Apple After an Earnings Beat](https://www.cmlviz.com/research.php?number=12158&cml_article_id=20180905_how-to-trade-apple-after-an-earnings-rip)

**1 Day After Earnings Drop, Long Put** This follows the same guidelines, but rather than look for an earnings rise, it looks for a stock that has fallen by 3% or more after earnings and then tests the performance of a long put for the same time period as the "1 Day After Earnings Jump, Long Call" scan.

In fact, all of the rules are the same -- it's just a test of bearish momentum rather than bullish.

![image.png](https://cdn.document360.io/b73389a5-b202-4bf4-8df2-8c69e8edbb3b/Images/Documentation/image%2819%29.png)

One of the great benefits of this strategy is that it allows us to scan for names where the market is immediately showing movement and then to back-test it.