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Hopes Are High for F5 Networks Earnings -- Or Are They?

Buy-to-open call volume has been dominating the options action on FFIV

by 7/17/2012 10:53:24 AM
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Tech stock F5 Networks, Inc. (NASDAQ:FFIV - 90.67) will take its turn in the earnings spotlight later this week, with the company scheduled to report its fiscal third-quarter results after the market closes on Wednesday, July 18. Analysts are expecting FFIV to unveil a profit of $1.14 per share, up from 97 cents per share in the year-ago period. In the past four quarters, the Seattle-based networking specialist has surpassed consensus profit estimates every single time.

This solid track record on the earnings front probably explains why traders appear to be positioning themselves for another upside surprise from FFIV. In fact, bullish speculation is lingering near annual-high levels, pointing to widespread optimism ahead of the company's quarterly report.

During the past 10 days, options players on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open 3.02 calls for every put on the stock. This ratio ranks above 99% of comparable readings taken during the previous year, indicating that traders have rarely shown a greater preference for bullish bets over bearish.

FFIV SOIRIn the same optimistic vein, FFIV's 50-day call/put volume ratio on the ISE, CBOE, and PHLX stands at 1.29. This reading ranks in the 92nd percentile of its annual range, as calls have been purchased over puts at a faster pace only 8% of the time during the past year.

Likewise, the Schaeffer's put/call open interest ratio (SOIR) for FFIV is currently docked at 0.69, with calls easily outnumbering puts among options slated to expire within three months. This ratio ranks just one percentage point from a new 52-week low, implying that short-term options players have been more bullishly aligned just 1% of the time.

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