The recent invasion of passengers boarding Siemens AG's (SI: sentiment, chart, options) bullish bandwagon are likely cheering today's headlines. The German industrial issue this morning issued stronger-than-expected first-quarter earnings and encouraging expectations for 2009, citing strength in its energy business.
Ahead of the company's date in the earnings confessional, options traders were flocking to the bullpen faster than a BMW on the Autobahn. During the past 10 days on the International Securities Exchange (ISE), SI has seen more than 4.5 times as many calls than puts bought to open. This lofty ratio registers in the 85th annual percentile, implying that options players on the exchange have been more optimistic toward the security only 15% of the time during the past year.
However, despite the escalating hopes in the options arena, near-term speculators remain skewed toward the bears' lair. The equity's Schaeffer's put/call open interest ratio (SOIR) – which measures options slated to expire within 3 months – of 0.86 ranks in the 81st annual percentile. In other words, short-term options traders have been more skeptical of SI less than one-fifth of the time during the previous 52 weeks.
Also bearishly biased ahead of the solid earnings figures were analysts. Zacks reports that only 2 brokers deemed SI worthy of a "buy" rating, compared to 5 "holds" and 1 "strong sell."
Nevertheless, the shares of SI have prevailed today, despite the Street's skepticism heading into the firm's turn in the earnings spotlight. In afternoon trading, the security has journeyed more than 2.1 points, or 3.9%, into the black, and is currently flirting with the 56.75 level. What's more, the equity is now poised to close the session atop its 10-day moving average for only the fourth time this year.
In conclusion, should the shares of SI capitalize on the company's impressive earnings report by extending today's rally, the remaining pessimists in the options pits and analyst community could become apprehensive. An unwinding of skepticism – whether via a reversal in sentiment among options speculators, or a fresh wave of upgrades – could stimulate additional buying pressure on the stock.
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