ASML Holdings is set to report earnings tomorrow morning prior to the market opening. The stock has seen a surge of over 70% from previous lows and is currently trading at all-time highs. With ASML’s stock historically moving around 8% on earnings days, having a pre-established plan for potential price movements is important.

ASML is a semiconductor firm that creates photolithography systems essential for chipmakers globally. These tools are essential in current chip production, positioning ASML as a significant entity in the semiconductor sector.

For potential downward movements, there are two support zones identified for consideration if the earnings report leads to a drop. The initial support level is around $916, expecting initial buyers to emerge there. Should that not hold, a secondary support is identified at around $872, which could provide a point for a rebound if the price drops significantly.

On the upside, potential resistance levels are also identified. The first is near $1,058, with a secondary resistance level at the previous all-time high of around $1,109. These levels serve as checkpoints for possible continuation or adjustment of positions during trading. Risk management involves predefined entries, stops, and targets based on these levels.

With ASML’s earnings approaching, we are seeing implied volatility climb towards 45%, which suggests traders are pricing in a significant move. The stock has been consolidating since its powerful rally in 2024, when it surged over 70% from its lows that spring. This period of sideways action means built-up energy could be released following the report.

For those anticipating a positive surprise, buying call options or setting up bull call spreads could capture a potential breakout. We remember the stock pushing past the $1,109 level in late 2024, and strong guidance on new High-NA EUV machine orders could be the catalyst to test new highs. A recent report from the Semiconductor Industry Association showing a 4.8% year-over-year increase in global chip sales for the third quarter of 2025 supports this bullish outlook.

On the other hand, we must respect the potential for disappointment, especially given ongoing geopolitical tensions regarding export controls. We are watching the old pivot low around $916 from mid-2024 as a critical support zone. A bearish view could be expressed through buying puts, targeting that level if management signals any softness in future demand.

Considering ASML has a history of moving roughly 8% on earnings, a direction-neutral strategy is also on our radar. A long straddle or strangle could be profitable if the stock makes a sharp move in either direction, exceeding what the options market has priced in. This approach is simply a bet on volatility itself, which has proven to be a sound strategy during past ASML earnings events.

Ultimately, we will let the price action dictate our next steps and manage risk with discipline. The key is to have these levels and strategies mapped out beforehand to avoid emotional decisions in the heat of the moment. We will stick to our predefined entry and exit points regardless of the initial reaction.