
Earnings season is picks up a notch this week, with a some big names due to report including some of the major banks. This week we have Netflix (NFLX), Bank of America (BAC), Goldman Sachs (GS) and UnitedHealth Group (UNH) all set to report.
Before a company reports earnings, implied volatility is usually high because the market is unsure about the outcome of the report. Speculators and hedgers create huge demand for the company’s options which increases the implied volatility, and therefore, the price of options.