Ericsson Surges 20.6% on Earnings Beat and Strategic Divestment Gains—Is This the Start of a Bullish Rebound?

Summary
• Ericsson’s stock (ERIC) rockets 20.62% intraday, hitting a 52-week high of $9.87
• Earnings beat: EPS of $3.33 vs. $2.33 forecast, revenue of $56.2B exceeds $55.9B estimate
• Capital gain from iconectiv divestment and 28.1% adjusted EBITA margin drive optimism

Ericsson’s dramatic 20.62% intraday surge on October 14, 2025, marks a pivotal moment for the telecom giant. The stock’s rally to $9.855—a near 52-week high—follows a Q3 earnings report that exceeded expectations on both revenue and profit margins. With a robust 28.1% adjusted EBITA margin and a $7.6B capital gain from the iconectiv divestment, investors are reevaluating Ericsson’s value proposition. The move reflects a blend of operational discipline, strategic cost cuts, and a strong cash position, positioning the stock as a potential breakout candidate in a sector grappling with geopolitical and supply chain risks.

Earnings Beat and Strategic Divestment Fuel 20.62% Rally
Ericsson’s 20.62% intraday surge was catalyzed by a Q3 earnings report that far outperformed expectations. The company reported an EPS of $3.33, a 42.92% beat over the $2.33 forecast, and revenue of $56.2B, slightly above the $55.9B estimate. A $7.6B capital gain from the iconectiv divestment and a 28.1% adjusted EBITA margin—up from 12.6% in Q3 2024—highlighted operational discipline and margin expansion. CEO Börje Ekholm emphasized cost reductions, including a 6,000-employee workforce reduction, and a $51.9B net cash position, signaling financial flexibility. The stock’s rally reflects investor confidence in Ericsson’s ability to navigate a flattening RAN market and capitalize on AI-driven 5G adoption.

Options and Technicals: Capitalizing on Momentum and Volatility
• MACD: 0.098 (bullish divergence from signal line 0.120)
• RSI: 43.8 (oversold territory, suggesting potential rebound)
• Bollinger Bands: Price at $9.855, above the upper band of $8.54 (indicating overbought conditions)
• 200D MA: $8.05 (price trading 10% above, signaling strength)

Ericsson’s technicals suggest a short-term bullish bias despite a long-term ranging pattern. The stock is trading above its 200-day moving average and in overbought territory on the RSI, hinting at a potential pullback. However, the MACD histogram’s negative value (-0.022) indicates weakening momentum, suggesting caution for aggressive longs. Two options stand out for strategic positioning:

1. ERIC20251121C10 (Call Option)
• Strike: $10, Expiration: Nov 21, IV: 31.91%, Leverage: 28.93%, Delta: 0.461, Theta: -0.0063, Gamma: 0.386, Turnover: 92,548
• IV: Moderate volatility supports directional bets; Leverage: High potential for capital efficiency; Delta: Balanced sensitivity to price moves; Theta: Manageable time decay; Gamma: Strong responsiveness to price swings.
• Payoff: At a 5% upside (target $10.40), the payoff is $40 per contract. This option offers a high leverage ratio and liquidity, ideal for capturing a continuation of the rally.

2. ERIC20260116C10 (Call Option)
• Strike: $10, Expiration: Jan 16, IV: 28.16%, Leverage: 19.67%, Delta: 0.488, Theta: -0.0034, Gamma: 0.280, Turnover: 176,770
• IV: Slightly lower than the Nov contract, reducing premium costs; Leverage: Moderate but sufficient for a longer-term play; Delta: Slightly higher for a more stable position; Theta: Slower decay for extended holding; Gamma: Strong enough to benefit from price acceleration.
• Payoff: At $10.40, the payoff is $40 per contract. This option balances time decay with liquidity, making it suitable for a mid-term bullish outlook.

Trading Setup: Key support at $8.22 (middle Bollinger Band) and resistance at $9.87 (52-week high). A break above $10.00 could trigger a test of $10.50. Aggressive bulls may consider ERIC20251121C10 for a short-term play, while ERIC20260116C10 offers a safer, longer-term bet. Avoid overexposure to puts given the RSI’s oversold reading and the stock’s strong cash position.

Backtest LM Ericsson Telephone Stock Performance
It looks like the back-test engine failed because the event list we supplied was empty. When I screened for “≥ 21 % surges” using the daily close-to-close return, there were no days from 2022-01-01 to 2025-10-14 in which ERIC.O closed more than 21 % above the prior day’s close. Because the event list was empty, the engine raised an internal error.Possible next steps:1. Use a different definition of “intraday surge”, e.g. • High-price vs. previous close ≥ 21 %, or • Intraday high ≥ 21 % above the day’s open. (We would need intraday OHLC data for this.)2. Lower the threshold (e.g. 15 % or 20 %) if you are comfortable analysing somewhat smaller moves.3. Narrow or shift the date range if you have a specific period in mind.Let me know which approach you’d like to take, and I’ll rerun the event back-test accordingly.

Ericsson’s Rally: A Strategic Buy or a Volatility Play?
Ericsson’s 20.62% intraday surge underscores its potential as a strategic play in a sector transitioning to AI-driven 5G infrastructure. The stock’s technicals and earnings fundamentals suggest a continuation of the rally if it holds above $8.22. However, the short-term bearish trend and overbought RSI indicate caution for aggressive longs. Investors should monitor the $9.87 52-week high as a critical resistance level. Meanwhile, the sector leader Nokia (NOK) is up 4.48%, signaling broader telecom sector strength. For those seeking leverage, the ERIC20251121C10 and ERIC20260116C10 options offer compelling risk-reward profiles. Action: Buy ERIC20251121C10 for a short-term breakout or ERIC20260116C10 for a mid-term hold, with a stop-loss below $8.22.