As the earnings season approaches for U.S. stocks, options on S&P 500 index components indicate that expected volatility is nearing the highs of July this year

U.S. stocks enter the earnings season this week. According to Bloomberg, options on S&P 500 constituents indicate that the average volatility after the release of corporate earnings is 4.7%, close to the highest level since 2022, which was reached during the earnings season in July this year, kicked off by JP Morgan (JPM.US).

The report also notes that options suggest significant volatility for consumer discretionary, technology, and healthcare stocks during the earnings period starting this week, with the pre-earnings expected volatility for the consumer discretionary sector being the highest since 2020. The resource sector is expected to have lower volatility, but it is still the highest level for that sector in three years. Additionally, options traders have pushed up the implied volatility of S&P 500 constituents, reflecting bets on the seven major tech stocks amid ongoing attention to artificial intelligence and big tech