ASML Holdings will report its earnings tomorrow morning before the market opens. The stock has risen over 70% from its recent lows and is now trading at an all-time high. Historically, ASML’s stock moves about 8% on earnings days, so it’s crucial to have a plan for any price changes. ASML is a semiconductor company that produces photolithography systems. These systems are vital for chipmakers around the world. They play a key role in current chip production, making ASML an important player in the semiconductor industry. If the earnings report causes a drop, there are two support levels to watch. The first support level is around $916, where we expect some buyers to step in. If this level doesn’t hold, the second support is at about $872, which could serve as a rebound point if the stock falls significantly. On the upside, we also have resistance levels to monitor. The first is near $1,058, while the second is around the previous all-time high of $1,109. These levels can help traders decide when to take action. Effective risk management means setting predefined entry, stop-loss, and target levels based on these points. With ASML’s earnings approaching, implied volatility is rising to about 45%, indicating that traders are expecting a big price movement. The stock has been trading sideways since a powerful rally in early 2024, when it jumped over 70% from its lows. This period of stability suggests that energy is building, which may be released after the earnings report. For those expecting positive news, buying call options or setting up bull call spreads might capture a potential breakout. The stock previously broke above $1,109 in late 2024, and strong guidance on new High-NA EUV machine orders could drive it to new highs. A recent report from the Semiconductor Industry Association shows a 4.8% year-over-year increase in global chip sales for the third quarter of 2025, supporting this optimistic view. However, we must also consider the risk of disappointing results, especially due to ongoing geopolitical tensions affecting export controls. We are monitoring the old pivot low around $916 from mid-2024 as a key support level. A bearish strategy, like buying puts, could target this level if management signals any weakness in future demand. Given ASML’s earnings history of moving around 8%, a direction-neutral approach is worth considering. A long straddle or strangle could be profitable if the stock makes a sharp move in either direction, surpassing what the options market expects. This strategy is a bet on volatility itself, which has worked well during previous ASML earnings reports. In the end, we will let the price action guide our next steps and will manage risk carefully. The key is to have these levels and strategies prepared in advance, avoiding emotional decisions in the moment. We will stick to our planned entry and exit points, irrespective of the initial market reaction.

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