Palo Alto Networks (PANW) reports earnings after the close. Wall Street expects 98 cents per share adjusted on $3.35 billion in revenue. Analysts have raised both earnings and revenue estimates several times over the past three months. The company has beaten on the top and bottom lines for eight straight quarters. The stock has roughly doubled in 2026, up nearly 100% so far this year, which sets a very high bar.
What to watch
Investors will focus on the growth path, AI-driven demand, and the push to sell more products through one platform, which the company calls platformization. They also want to know how much recent growth is organic given the added revenue from CyberArk. Annual recurring revenue in the next-generation security segment is a key question. The company has three segments.
Revenue grew 31% last quarter and is expected to grow about 32% this quarter. Remaining performance obligations are expected up roughly 32-33% year over year, a positive sign. Gross margins are expected around 75%, another key number.
Other cybersecurity names support the setup. CrowdStrike (CRWD) reported strong results, and PANW got a nice run off those earnings. Fortinet (FTNT) did well, and Cloudflare (NET) did well too. This fits the idea that AI helps these companies rather than hurting them. CrowdStrike also went in with a high bar, then beat and raised guidance.
The risk of a good report
A caution: this company often beats on earnings, yet the stock can still see profit taking and sell off even with good numbers. A beat does not guarantee a rally, especially after such a long run.
Kevin's trade - short put vertical (neutral to bullish)
The expected one-day move is about $31, close to one standard deviation. The plan uses a high-probability short put vertical in the September 4th weekly expiration, which expires in three days. Sell the 335 put, just inside the expected move, and buy the 325 put. This is a $10 wide spread. It was collecting about 210 credit at first, trading closer to 250 after the stock sold off. With the stock lower, you can either take the higher premium or move your strikes back in line with the expected move.
The 335 short put carries about a 71% probability of finishing out of the money, matching roughly one standard deviation. Risk is defined at $10 minus the credit taken in, so about $790 in risk against the $210 credit. The credit is the most you can make. The goal is for the stock to stay above 335 so the spread expires worthless and you keep the credit. Break even is around $332-333 to the downside. Watch expiration risk if the price lands between the two strikes. The trade is profitable in three out of four cases, collecting theta with defined risk.
Tom's trade - short call vertical (neutral to bearish)
Same September 4th weekly, expiring in three days, but to the upside. Sell the 385 call, buy the 395 call, a $10 wide spread collecting about $2.30, or $230 per spread, with $770 in risk. Profit holds as long as the stock stays below 395, about one standard deviation to the upside. Break even is 387.30. The short call vertical has a 73.6% chance of finishing out of the money, giving a big cushion.
Why trade it this way
These are high-priced stocks, so the leverage in the options market lets you take a directional lean without buying an at-the-money call or call vertical and paying for full upside exposure. You can be wrong on direction and still profit as long as price stays on the right side of the break even. Neither trade needs PANW to move at earnings to make money. If the stock sits still, both profit. If it moves a little either way, both profit. The only real threat is a big move through the one standard deviation level - Kevin's on the downside, Tom's on the upside. Using probabilities and controlling risk makes this a more passive way to trade earnings events.
