How a sympathy play works
When a company reports, the market re-prices everything its results say about the world: its competitors' demand, its suppliers' order books, its customers' budgets. A strong Deere quarter says something about AGCO; a homebuilder's guidance moves the other builders. The peer's move is usually smaller than the reporter's — but the peer's options are priced for an ordinary day, which changes the trade's economics entirely.
Real, measured sympathy pairs (this week)
These are live examples from EarningsWatcher's quality-gated pair board — reporters with earnings in the coming days and the peer that has tracked them most reliably:
| Pair | Same direction | Peer's typical move | vs normal day | Report |
|---|---|---|---|---|
| OKTA → GTLB | 79% of 14 | ±5.9% | ×2.9 | Aug 26 |
| PDD → TAL | 75% of 28 | ±3.5% | ×2.1 | Aug 24 |
| KSS → AEO | 81% of 26 | ±3.1% | ×1.7 | Aug 26 |
| PD → MDB | 88% of 17 | ±3.2% | ×1.8 | Aug 27 |
Full current board: this week's sympathy plays (updated daily) · per-stock breakdowns: OKTA, PDD, KSS and 50+ more.
Why the peer's options sidestep IV crush
Options on the reporter are expensive into the print for a reason: the expected move is in the premium, and implied volatility collapses the moment the numbers are out. The peer has no event of its own, so there is no ramp to pay and no crush to eat — measured across EarningsWatcher's tracked pairs, the median change in peer ATM implied volatility through a reporter's print is approximately zero. An at-the-money straddle on the peer therefore turns the sympathy move into a direction-free position with a normal-day hurdle. Whether that hurdle has historically been beaten — event by event, from real option prices — is exactly what the member board grades.
How EarningsWatcher measures sympathy (the gates)
Every candidate pair is counted over up to ten years of the reporter's earnings days: the peer's same-day close-to-close reaction, with three exclusions — the peer's own earnings window, heavy market days (|SPY| > 1.5%), and events without tradeable data. A pair must then pass sample-size (enough events to mean something), same-direction rate (well above a coin flip), and amplification (the peer moves meaningfully more than its normal day) to be listed. Most candidates fail. Survivors get a 0–100 score and a live straddle grading for the next report.
Frequently asked questions
What is a sympathy play in stocks?
A sympathy play is a trade in a stock that is moving on another company's news rather than its own — classically, a close competitor or supplier repricing on a peer's earnings report. The reporter surprises; the market reads the surprise through to companies with the same customers, sector or economics, and those names move 'in sympathy' the same day.
Why trade the peer instead of the reporter itself?
Options on the reporter carry the event premium: implied volatility is bid up into the print and collapses after it (IV crush), so even a correct directional bet can lose. The peer has no scheduled event that day, so its options are priced for a normal day — measured on EarningsWatcher's pairs, peer IV changes a median of roughly 0% through the reporter's print. You pay no crush; you need the sympathy move to simply exceed a normal-day breakeven.
How do you measure whether a sympathy pair is real?
Count it, don't assume it. For each reporter's past earnings days, take the peer's same-day close-to-close move; exclude days the peer had its own earnings or the whole market moved hard; then require a minimum sample, a same-direction rate well above a coin flip, and amplification versus the peer's normal daily move. Most intuitive pairs fail these gates — the ones that pass are the tradeable ones.
What are examples of sympathy plays?
From the current quality-gated board: OKTA→GTLB (79% same-direction over 14 reports); PDD→TAL (75% same-direction over 28 reports); KSS→AEO (81% same-direction over 26 reports). Classic textbook cases are homebuilders around a builder's report, or equipment names around Deere.
When do sympathy plays not work?
When the 'correlation' was really the market (a macro day), when the peer has its own earnings nearby (its own event premium and its own story), when the sample is a handful of events, or when the relationship has decayed — sympathies weaken and invert as businesses diverge. That is why event counts, exclusions and refreshed data matter more than intuition.