Don't Bank on Earnings

Often we equate earnings season with volatility. The implied volatility on most stocks does tend to rise into earnings, but it doesn't guarantee a big move after the earnings announcement.

For instance, take a look at JPMorgan Chase (JPM) and Goldman Sachs (GS). Given that expectations are in the mid-2% range, neither of these stocks is pricing in a large post-earnings move. Furthermore, if we look back over the past four reports, we find that Goldman Sachs has not exceeded a move over 2.5%, and JPMorgan Chase has not moved over 4%. That's not to say neither can nor won't move, but just realize that anything over 2.5% is a fairly big move on both names....289 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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