ARM Holdings reports Q4 FY2026 earnings on Wednesday, May 6, after the close. The options market is pricing a roughly 10% move in either direction. Here is what the setup looks like and how traders are thinking about it.
- ARM (NASDAQ: ARM) reports Q4 FY2026 on May 6, 2026 AMC. Analysts expect $1.47B revenue and $0.58 EPS.
- The options market is pricing approximately a 10.2% expected move, implying a range of roughly $183 to $224 from the $203 pre-earnings price.
- Historical ARM earnings reactions have been volatile: +11.56% after Q3, -11.34% after Q2. The stock has exceeded its priced expected move in multiple recent quarters.
- ARM is up approximately 84% year to date, trading at an extreme valuation premium. Any guidance miss could trigger an outsized downside reaction.
- All strategy examples in this article are hypothetical and for educational purposes only. Nothing here is a trade recommendation.
What ARM Holdings Does (and Why Earnings Volatility Is Structural)
ARM Holdings does not manufacture chips. It designs the instruction set architectures (ISAs) and CPU cores that other companies license to build their own processors. Virtually every smartphone chip, and a rapidly growing share of data center AI accelerators, runs on ARM architecture. ARM collects licensing fees upfront and royalties on each chip shipped.
This business model creates a specific earnings dynamic: revenue is lumpy, tied to when major customers like Apple, Qualcomm, and NVIDIA ship products and report royalty volumes. One strong quarter from Apple’s iPhone cycle or NVIDIA’s Blackwell data center ramp can push ARM’s reported royalties well above expectations. A slowdown in any major customer’s production can drag them below it.
The result is a stock that tends to move sharply on earnings: not just because of the reported numbers, but because guidance informs what the next 12 months of royalty flows look like. With ARM trading at a significant premium to analyst consensus price targets, the market is pricing in a very specific growth trajectory. Anything that disrupts that story, even slightly, can trigger a large reaction.
The Expected Move: What the Options Market Is Pricing
Before earnings, the options market builds an implied expected move into front-week option prices. The standard method is to add the at-the-money (ATM) call and put prices for the expiration that captures the earnings event.
As of May 5, with ARM trading near $203, the options market is pricing roughly a 10.2% expected move for the May 9 weekly expiration. That translates to an expected range of approximately $182 to $224.
To put that in perspective:
- A 10.2% move on ARM at $203 is approximately $20.70 per share.
- An options buyer who buys the May 9 ATM straddle (both the $203 call and $203 put) would be paying roughly $20-21 in total premium. They need ARM to move more than that in either direction just to break even at expiration.
- An options seller taking the other side collects that premium and profits if ARM stays within the expected range.
The expected move is not a prediction. It is what the collective options market is charging for the risk of holding through the event. Markets can and do overshoot or undershoot this range regularly.
ARM’s Historical Earnings Reactions
To calibrate whether 10.2% feels cheap or expensive, it helps to look at what ARM has actually done in recent earnings reports.
| Quarter | Actual Move (Next Day) | Direction | Notes |
|---|---|---|---|
| Q3 FY2026 (Feb 2026) | +11.56% | Up | Beat on both revenue and EPS; AI royalty acceleration |
| Q2 FY2026 (Nov 2025) | -11.34% | Down | Guidance disappointed; market saw slowdown risk |
| Q1 FY2026 (Aug 2025) | Variable | Mixed | Inline quarter with modest reaction |
The key observation: ARM has moved by 11% or more in two of its last few quarters. The 10.2% priced expected move is not obviously overpriced given this history. Traders who sold premium going into both of those quarters were hurt. The stock has a demonstrated tendency to exceed the priced move.
That does not mean it will do so again. But it means defined-risk structures, rather than naked short premium, make more sense here for most traders.
Four Ways to Trade ARM Earnings (Hypothetical Examples)
There is no single right approach to an earnings trade. The strategy depends on your directional view, your risk tolerance, and whether you are trying to profit from a big move or from the stock staying in range. These are hypothetical examples, not trade recommendations.
1. Short Iron Condor (No Directional View, Expecting a Stay-in-Range Outcome)
A short iron condor profits if ARM stays within a defined range through expiration. Using the 10.2% expected move as a guide, a trader might hypothetically sell the $183 put, buy the $175 put (lower wing), sell the $224 call, and buy the $232 call (upper wing), all in the May 9 expiration.
This structure collects premium if ARM closes between $183 and $224. The maximum loss is limited to the width of the wings minus the credit received. Given ARM’s history of exceeding the expected move, the short iron condor here requires accepting a relatively low probability of max profit unless the wings are placed conservatively.
This trade is appropriate for traders who believe the market is overpricing the expected move and that ARM will react modestly. Given the historical data, that view requires conviction.
2. Long Straddle or Strangle (Expecting a Big Move, Uncertain Direction)
A long straddle or strangle profits if ARM moves significantly in either direction. A trader who buys the $203 call and $203 put (straddle) at a hypothetical combined cost of $21 needs ARM to close below $182 or above $224 to profit at expiration.
The risk: if ARM moves exactly in line with the priced expected move (say, exactly 10.2%), the straddle buyer breaks even. They need the stock to exceed the expected move to profit, which happens but is not the base case.
IV crush is the primary risk here. Even if ARM moves 8-9% after earnings, implied volatility will collapse dramatically in the post-earnings session. Option premiums will fall across the board. A straddle buyer who was right about direction but wrong about magnitude will still lose money because the IV collapse erases the value of the non-moving leg.
3. Directional Vertical Spread (Moderately Bullish or Bearish with Defined Risk)
For traders who have a view on direction, a vertical spread is a more capital-efficient choice than buying a naked call or put. A hypothetical bull call spread might involve buying the $210 call and selling the $230 call, both in the May 9 expiration. This structure profits if ARM moves above $210 by expiration and has a defined maximum loss equal to the premium paid.
The advantage over a long call: the short call you sell reduces the premium cost, which also reduces the IV crush drag if ARM moves in your direction but not enough to fully justify the single-leg premium.
Bearish traders could mirror this with a put spread below current levels, buying a put near $195 and selling a put near $180.
4. Pre-Earnings IV Run (Close Before the Print)
A fourth approach has no position through the actual earnings event. A trader who buys options 1-2 days before the report and sells before the close on May 6 captures the pre-earnings IV expansion without taking on the IV crush risk after the print.
This works when IV is still rising into the event. The risk: if ARM sells off before earnings, the position loses value from the underlying price move even if IV rises. This approach requires careful position sizing and a clear exit rule before earnings.
Why ARM’s Valuation Amplifies Risk in Both Directions
ARM’s current stock price of approximately $203 trades at a significant premium to consensus analyst price targets, which cluster around $164. Wells Fargo raised their target to $220 ahead of this quarter, but most analyst models have the stock priced for a very optimistic growth scenario.
This creates an asymmetric risk profile that options traders should factor in:
- On a beat: The stock may not rally much, because a strong quarter is already partly priced in. Positive surprises may produce muted reactions if guidance only meets expectations.
- On a miss: The stock could fall sharply, because a premium valuation leaves little room for error. A guidance cut or slower-than-expected royalty growth could reprice the stock aggressively.
This is the same dynamic that played out with Palantir last night: despite a massive earnings beat, the stock barely moved in after-hours trading because a strong result was already baked into the price. ARM’s situation is similar. Traders using defined-risk bearish structures may find more edge here than pure premium sellers, depending on their view of the valuation.
Platform Tools for Analyzing the Setup
Before placing any options trade around earnings, having the right platform matters. Two options-focused platforms worth using for this analysis:
tastytrade displays the at-the-money expected move directly on the options chain, and their probability of profit calculator updates in real time. The platform is purpose-built for options sellers and makes iron condor entry straightforward. Open an account at tastytrade.
Interactive Brokers offers a Volatility Lab under their analytics tools that shows ARM’s IV term structure and historical realized volatility, which helps calibrate whether the 10.2% expected move is high or low relative to history. Their options commissions are competitive for high-volume traders. Open an account at Interactive Brokers.
Who This Trade Is (and Is Not) For
ARM earnings options are not a beginner trade. The stock has demonstrated a willingness to move 10-12% in a single session. Undefined-risk structures (selling naked options) on ARM without deep experience in position management and margin calls is not appropriate for most retail accounts.
This setup is relevant for:
- Experienced premium sellers who use defined-risk structures and understand the probability math.
- Directional traders with a clear view on ARM’s valuation who want to express that view with limited risk.
- Traders familiar with IV crush and who have a plan for closing the position after the earnings event.
It is not appropriate for:
- Traders who have not traded single-name earnings options before.
- Accounts where a single ARM options contract represents more than 2-5% of total capital.
- Anyone expecting a “safe” premium collection trade given ARM’s historical move pattern.
Bottom Line
ARM Holdings reports Q4 FY2026 on May 6 after the close. The options market is pricing a 10.2% expected move in either direction, and the stock’s recent history shows it can exceed that range. Defined-risk structures fit the setup better than pure premium selling given that history. Whatever your approach, close or manage the position after the earnings print: IV crush will compress option values significantly regardless of direction.
Frequently Asked Questions
Q: What is the expected move for ARM on May 6 earnings?
A: As of May 5, the options market is pricing approximately a 10.2% expected move, implying a range of roughly $183 to $224 from a pre-earnings price near $203. This is derived from the at-the-money straddle price for the May 9 weekly expiration and changes as the stock price and IV change.
Q: What time does ARM report earnings on May 6?
A: ARM Holdings reports Q4 FY2026 results after the market close on Wednesday, May 6, 2026. Results are typically released between 4:00 and 4:30 PM ET, with a conference call following shortly after.
Q: What happened to ARM stock after the last few earnings reports?
A: ARM moved approximately +11.56% after Q3 FY2026 earnings (February 2026) and approximately -11.34% after Q2 FY2026 earnings (November 2025). The stock has demonstrated a pattern of significant post-earnings moves, often near or exceeding the priced expected move.
Q: Should I buy ARM calls before earnings?
A: This article cannot provide trade recommendations. What traders should understand is that buying a naked call before earnings exposes you to IV crush: even if ARM moves in your direction, the collapse in implied volatility after the print will reduce option value. A vertical call spread reduces this drag at the cost of capping your upside. All examples in this article are hypothetical.
Q: What is IV crush and how does it affect ARM earnings trades?
A: IV crush is the sharp decline in implied volatility that happens immediately after an earnings event. Before earnings, IV is elevated because the outcome is uncertain. After the print, that uncertainty is resolved and IV falls sharply, often 40-60% in a single session. This collapses options premiums even on the “winning” side of a trade. Premium sellers (short options) benefit from IV crush; premium buyers are hurt by it.