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Earnings Season Volatility

Education
September 02, 2025•1 min read

Why do stocks move so wildly at the end of each quarter?

Written by: Nate Aul, Ross Williams

The stock market experiences elevated volatility each quarter due to earnings season which can heavily influence the movement of stocks as their earnings are released. 

Earnings percent jumps can be derived from the implied volatility of a stock’s short term options, and they are a measure of volatility in excess of the stock's typical daily volatility.

  • The movement of many stocks is heavily influenced by earnings. Knowledge of earnings dates and  expected moves  is key for single stock trading ideas or strategies.

  • The earnings date AND timing of before or after the close is important.

  • The market’s jump expectation can vary widely from quarter to quarter due to macro volatility, executive suite movement, government scrutiny, industry landscape, etc.

  • Option premiums (even long term expirations) change drastically for the week of earnings. Understanding catalysts is paramount.

  • The percent jumps are only guided expectations from market supply and demand.. There is no guarantee that the expectation will hold!

It is extremely valuable to understand the expected percent jump of a stock due to its earnings when you have a stock and/or options position in that stock on its earnings date. During our time as options market-makers, this was one of the most valuable pieces of single-stock trading work.

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With a B.A. in Physics and a Masters in Engineering, Nathan is a math and data-driven professional. His nearly twenty years of financial industry experience includes building out the metals trading group from the ground up at Citi, managing data-driven index derivative strategies at X3 Capital, and handling fund operations and risk management systems at Lumen.

Nate Aul

With a B.A. in Physics and a Masters in Engineering, Nathan is a math and data-driven professional. His nearly twenty years of financial industry experience includes building out the metals trading group from the ground up at Citi, managing data-driven index derivative strategies at X3 Capital, and handling fund operations and risk management systems at Lumen.

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