MorningWord 1/22/13: Implied Earnings Moves Trending

MorningWord 1/22/13:  As Enis described in his MacroWrap this morning, Q4 earnings, at least the smattering that we have seen so far have been fairly divergent.  The beginning of earnings season can be a fairly dangerous time for traders as trends have yet to emerge and the options market may price in a bit more risk at the onset of this period than it will towards the end.  Take bank earnings last week (WFC, JPM, C, BAC, GS & MS) for example; for the most part, all of the implied moves were higher than the 4 qtr trailing moves, and only one of the six stocks outperformed the options market’s expectations, MS up ~8% on Friday following better than expected results.  MS’s massive out-performance suggests that market participants had fundamental expectations well in-check for the others and underestimated something as it related to MS’s Q4 prospects or outlook.  

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