WuBlockchain’s WhiteLine Daily said a recent event-trade setup has been rewarding a specific structure: a stock builds momentum ahead of earnings, the company then delivers a beat, upside calls are relatively expensive, and call positioning is concentrated above the market. Once the stock pushes through key strikes, dealer hedging and short covering can magnify the move. The report pointed to Nebius (NBIS) as a recent case.
Why NBIS was able to rally about 34% in one session
AI cloud infrastructure company Nebius reported earnings that came in clearly above expectations. The company posted Q2 revenue of $582.3 million, up 454% year over year. Adjusted EBITDA reached $236.2 million, ahead of market expectations of roughly $169 million. Nebius also said it signed four contracts worth more than $1 billion each during the quarter and raised its contracted power target for the end of 2026 to 5 GW.
WhiteLine Daily said those numbers can explain why the stock went up, but not by themselves why it gained roughly 34% in a single day. Revenue was only about 1.7% above expectations, according to the report. What helped extend the move was momentum that had already formed before the earnings release, along with amplification from options positioning and short interest.
When a stock keeps rising, traders tend to buy upside calls at higher strikes. As the share price climbs, the delta of those calls also increases. If market makers are broadly short gamma, they need to buy stock as it rises to keep their books delta-neutral. That demand can push the stock toward even higher strikes and create more hedging demand along the way.
NBIS was also carrying a relatively high short interest. Using different data methodologies, the report said shorts accounted for roughly one-quarter to 30% of the float. After the earnings beat, some short sellers were forced to cover, adding another stream of buying in the same direction as dealer hedging and momentum-driven flows.
WhiteLine Daily summed up the move this way: earnings lit the fire, while gamma hedging and short covering provided the acceleration. In its framing, the earnings beat set the direction, and the latter two factors influenced how far the rally could run. The sequence it outlined was: Beat → stock rises → dealers buy to hedge → stock rises again → short covering → momentum money joins.
Options traders are pricing for this type of move
The report said this structure is appearing in more individual names. Based on Aug. 12 options data and using 25Δ call implied volatility minus 25Δ put implied volatility as the measure, front-month skew in SPX and NDX stood at -3.3 and -4.0, meaning downside puts were still more expensive. In WOLF, MU, and INTC, however, the readings were +3.1, +3.8, and +4.8, showing that the market was willing to pay a higher premium for upside calls.
WhiteLine Daily also noted that a positive skew does not mean a stock must rise. It shows that money is assigning a price to upside convexity. If a company is approaching earnings, the stock has already built momentum, calls are concentrated above spot, and short interest is elevated, then an earnings beat is more likely to shift the trade from a fundamentals-driven move into a squeeze-driven one.
Four conditions to watch in a momentum earnings trade
According to the report, screening for a momentum earnings trade requires four conditions to be watched together:
- Momentum
- Call skew
- Upside gamma concentration
- Short interest
It said no single indicator is enough on its own. The options structure is more likely to materially amplify post-earnings volatility only when all four overlap.
The note added that Wolfspeed (WOLF) is scheduled to report earnings on Aug. 19. The next things to watch are whether its pre-earnings momentum can continue, whether call skew keeps rising, and whether room for short covering can produce a structure similar to NBIS.