--- title: "Earnings Gap Risk Planner" description: "Stress-test how overnight earnings gaps can produce losses larger than a planned stop. Enter position details and gap scenarios to see the dollar impact." canonical: https://www.getswoopr.com/tools/earnings-gap-risk-planner/ source: "Swoopr Investment: https://www.getswoopr.com" --- Risk Tools · Earnings Season # Earnings Gap Risk Planner: Stress-Test Your Stop Before Earnings Find out how far an overnight gap can blow past your stop. Enter your position size, planned stop, and custom adverse gap prices to see the exact dollar loss each scenario produces, and whether it fits your risk budget. Search guides, glossary terms, tools and answers Search Understand earnings gaps first Go to planner **Direct answer:** The Earnings Gap Risk Planner calculates your worst-case dollar loss when a stock opens at a gap price past your stop order on an earnings report, so you can size positions to tolerate that gap before you enter. Enter your entry price, direction, share count, planned stop, and up to five adverse gap prices; the tool shows the exact loss for each scenario entirely in your browser. ## Why Your Stop Doesn't Protect You Through Earnings A stop order is a powerful intraday tool. But when a company reports earnings after market close, the stock can open the next morning at a dramatically different price, skipping straight past your stop without triggering it at anything close to your intended exit. This is called a **gap risk**, and it's one of the most common ways traders sustain losses far larger than they planned. This planner lets you model that scenario concretely. Enter your entry price, direction, share count, and planned stop. Then add one to five custom adverse gap prices, the prices you're afraid the stock might open at, and see exactly what each scenario costs in dollars and as a percentage of your reference capital. All calculations run locally in your browser. No position details are sent anywhere. | Output | Definition | How to read it | | --- | --- | --- | | Planned stop loss | Dollar loss if exit occurs exactly at your stop price | Your intended max loss; real gaps often exceed this | | Scenario exit price | The adverse gap price you entered for that row | A hypothetical open price after an adverse earnings reaction | | Loss per share | Price move against the trade plus slippage allowance | Includes slippage to model real fill friction on the open | | Total loss | Loss per share × share quantity | Dollar impact on the account for this scenario | | % of capital | Total loss ÷ reference capital × 100 | Compares the loss to your risk budget baseline | | vs planned stop | Scenario total loss minus planned stop loss | Positive = gap cost more than you planned; negative = within stop | | Max shares at budget | Floor(max stress budget ÷ loss per share for that scenario) | Largest position that keeps worst-case loss within your budget | ## Earnings Gap Risk Planner For education only; not investment advice. Gap scenarios are arbitrary stress inputs, not forecasts. Actual gaps can be worse. Position Details Entry Price ($) Direction Long Short Share Quantity Whole shares only. Planned Stop Price ($) Your intended exit if the stock moves against you during regular hours. The planner will warn if this is inconsistent with your direction. Risk Parameters Reference Capital ($) Your total account size or risk-budget baseline. Used to express losses as a percentage. Slippage Allowance ($ per share) Extra friction to model: wide spread on the gap open, partial fill, or market-order impact. Enter 0 to ignore. Max Stress-Loss Budget ($) (optional) If entered, the planner also shows the maximum share count that keeps each scenario's loss within this budget. Gap Scenarios (Adverse Exit Prices) Enter the price you fear the stock could open at after an adverse earnings reaction. Add up to 5 scenarios. At least one is required. | Scenario | Adverse Exit Price ($) | Remove scenario | | --- | --- | --- | | Scenario 1 | Scenario 1 adverse exit price | Remove | + Add Scenario Calculate Clear ## Frequently Asked Questions ### Why doesn't my stop protect me through earnings? A stop order becomes a market order (or limit order) when the trigger price is hit. During after-hours trading or before the open, your stop can be triggered at a price far below (for a long) your intended exit because the stock gaps straight through that level. You entered a stop at $43 but the stock opens at $36, your fill is near $36, not $43. The planner shows you this gap numerically. ### What should I use as adverse exit prices? Use prices that reflect realistic negative reactions for the specific stock, not a generic percentage. Gap size after an earnings miss varies widely by company, smaller, more volatile, or thinly-traded names have historically shown larger overnight moves than large, heavily-covered blue chips, but the exact range differs by stock and by how far the report deviated from expectations. Instead of guessing a percentage, pull the stock's own historical post-earnings gap moves (its last 8-12 reports), its options-implied move for the upcoming date, and the analyst consensus downside target, then enter those actual prices as your scenarios. The planner does not suggest prices, you supply the stress inputs. ### How is the planned stop loss calculated? For a long position: planned stop loss = (entry price − stop price) × shares. For a short: (stop price − entry price) × shares. Slippage is not added to the planned stop loss calculation. It is only added to the gap scenario losses, because slippage on a stop triggered intraday is typically much smaller than on a volatile gap open. ### What does the "vs planned stop" column mean? It shows how much more (or less) the gap scenario costs you compared to your planned stop loss. A positive number means the gap blew through your stop and cost you that many additional dollars. A negative number (or zero) would mean the adverse price is actually at or better than your stop, unlikely if you model genuinely adverse scenarios, but possible if you enter a scenario above (long) or below (short) your stop. ### What is the max shares at budget figure? If you enter a maximum stress-loss budget, the planner divides that budget by the loss per share for each scenario to find the largest position size that stays within budget under that scenario. It uses floor division, rounding down to whole shares, so the result is always achievable. Different scenarios give different answers; the most conservative (lowest share count) is your actual safe maximum if all scenarios are equally plausible. ### Are my values saved or transmitted? No. All calculations run locally in your browser. No prices, quantities, or results are transmitted to a server, stored between sessions, or captured in analytics events. Refresh or close the page and all values are cleared. ## Related Reading - [Earnings Gap & Post-Earnings Drift: understand the phenomenon](https://www.getswoopr.com/stocks/trading-strategies/earnings-gap-post-earnings-drift/) - [Risk Management: hub](https://www.getswoopr.com/risk-management/) - [Position Sizing & Risk Per Trade: size your position before earnings](https://www.getswoopr.com/learn/position-sizing-risk-per-trade/) - [Slippage & Market Impact: understand the slippage allowance input](https://www.getswoopr.com/learn/market-structure-and-trade-execution/slippage-and-market-impact/) - [Trading Strategies: plan around earnings season](https://www.getswoopr.com/stocks/trading-strategies/) - [Free Stock & Crypto Trading Tools](https://www.getswoopr.com/tools/) the section this guide belongs to - [APY / Effective Yield Calculator](https://www.getswoopr.com/tools/apy-effective-yield-calculator/) a companion guide in this cluster - [Balance Transfer Calculator: The Fee Against the Interest It Buys Out](https://www.getswoopr.com/tools/balance-transfer-calculator/) a companion guide in this cluster - [CD Ladder Builder](https://www.getswoopr.com/tools/cd-ladder-builder/) a companion guide in this cluster - [Company Metric Comparison Dashboard](https://www.getswoopr.com/tools/company-fundamentals-comparison/) a companion guide in this cluster ## References - [SEC: Form 8-K Fast Answers](https://www.sec.gov/answers/form8k.htm): background on the corporate-event disclosures (including earnings releases) that can trigger the after-hours or pre-market price gaps this planner models. - [CFA Institute Research and Policy Center](https://rpc.cfainstitute.org/): general methodology background for gap-risk and event-driven position sizing. This planner projects outcomes from stress scenarios you enter, it does not predict actual earnings-gap magnitude or direction.