Earnings season is here, but the options market isn't taking the risk seriously.

The data is in front of us: the average implied volatility of earnings report days for S&P 500 component stocks is only 4.5%, far below the historical average of 5.6%. At first glance, the market's pricing of this wave of shocks doesn't seem tense.

But there's an interesting contradiction—many individual stocks experience quite sharp swings on earnings report days, yet at the index level, it remains as steady as an old dog, without large fluctuations. Why? Two reasons stack up: first, the index itself has an inherent diversification trait, with rising stocks offsetting falling stocks; second, earnings are not released all at once but gradually, spreading out the impact naturally. The result is individual stocks acting up, but the index remains unaffected.

What does this mismatch mean for investors? Two possibilities:

**First**, betting on the index's big move with options might not be cost-effective. The costs aren't that high, but the profit potential is also compressed.

**Second**, if a systemic shock really occurs—such as policy changes, interest rate adjustments, tariff policies, or major companies' earnings crashing simultaneously—the risk might be underestimated by index options. At that point, prices will be forcibly rewritten, and once volatility amplifies, the market will have to adjust forcefully.

In other words, the current calm may just be an illusion.