How might the timing of the earnings release (post‑market) affect the stock’s volatility on the day of the call?

Impact of a post‑market earnings release on volatility

Because NCNO’s Q2‑FY26 results will be disclosed after the market close (4:30 p.m. ET), the immediate price discovery will occur in the after‑hours (AH) and pre‑market sessions of the following day rather than during regular trading hours. Historically, stocks that release earnings post‑close tend to experience compressed volatility during the normal session (the market often “waits” for the news), followed by a sharp spike in implied‐volatility (IV) and price moves in the AH market. Market makers will widen bid‑ask spreads on the day of the call as they price in the uncertainty of the upcoming data, and the options market will typically see a 20‑30 % rise in IV for the near‑term expiries (especially the 0‑DTE and 1‑DTE strikes). If the results deviate significantly from consensus, the AH price move can spill over into the open of the next trading day, generating a “gap‑and‑run” that can exceed 5–10 % in either direction, especially for a high‑growth, high‑beta name like NCNO.

Trading implications

1. Pre‑call positioning – With the market closed, traders can still adjust exposure via after‑hours options or by placing limit orders for the next session. Consider buying out‑of‑the‑money (OTM) calls (or puts) that expire in 1–2 weeks if the consensus is strongly positive/negative, as the post‑market IV boost makes these contracts relatively cheap now but will price in the earnings surprise when it hits. Conversely, if you anticipate a modest result, selling short‑dated OTM options can capture the IV crush that typically follows a “no‑surprise” earnings release.

2. Risk management – Expect wider bid‑ask spreads in the AH market, so place limit orders rather than market orders. Set stop‑losses on the underlying at the pre‑release support/resistance levels (e.g., the 20‑day EMA or recent intraday swing lows) to guard against an unexpected gap. If the after‑hours price moves beyond your risk tolerance, consider closing the position before the market opens to avoid overnight carry risk.

3. Technical confirmation – Monitor the 5‑minute and 15‑minute charts during the after‑hours session. A break above the pre‑market high or a failure to hold the pre‑market low often sets the direction for the open. If the stock gaps up and holds above the prior close, look for momentum‑based entries (e.g., buying on a breakout above the prior high with a tight stop at the low of the AH session). If it gaps down, consider short‑term shorts or buying puts, but stay mindful of the high implied volatility that can inflate premiums and widen slippage.

In summary, the post‑market timing will compress intraday volatility on the day of the call but create a high‑volatility, high‑IV environment in the after‑hours, with a strong likelihood of a sizeable opening gap. Traders should plan entries and exits around the after‑hours price action, use options to capture or hedge the IV swing, and respect the widened spreads and potential for rapid, direction‑biased moves once the market opens.