. And with S&P 500 profits widely expected to fall, Wall Street isn't preparing for a party.
"The options market has been slow to price in the increasing size of earnings day moves," equity derivatives associate Vishal Vivek wrote in a note to clients."The average S&P 500 stock moves +/-3.4% on the day of earnings relative to an average daily move of +/-1.1%." They've zeroed in on a group of 20 companies that will report their results by August 16 and where options trading is relatively liquid. They recommend betting on volatility by buying straddles on them. That strategy requires an investor to buy both a put and a call on a stock with the same expiration date and strike price.
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