Traders Brace for Biggest S&P Earnings-Day Reactions Ever

Traders are bracing for one of the most volatile earnings periods in stock market history.

At least that’s what they are positioning for two days before big banks kick off the reporting cycle in the US. Options traders expect individual stocks in the S&P 500 Index to move 4.7% on average in either direction after reporting their results, the largest earnings-day moves on record, according to strategists at Bank of America Corp.

With uncertainty about inflation and the prospect of further interest-rate cuts fraying investors’ nerves, traders are turning to earnings season for reassurance that, at least for Corporate America, all is well. Regardless of the actual results, rising volatility is good news for active managers that discern losers from winners, the bank’s strategists say.

“We believe this earnings season will once again be stock pickers’ paradise,” Savita Subramanian, head of US equity and quantitative strategy, wrote Monday in a note to clients.

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