Earnings announcements are key events for traders, offering insight into a company's financial performance and future outlook. Stocks often react sharply to whether results beat or miss analyst expectations, creating short-term trading opportunities. However, this volatility can be unpredictable - large price swings may occur regardless of the actual numbers, driven by sentiment, guidance, or surprise factors. Because of this, many traders choose to exit positions ahead of earnings unless they have strong conviction in the outcome or a strategy to manage risk. For those who stay in, the potential for outsized gains comes with equally significant downside risk.