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The crush of corporate earnings continues, and options traders are positioning themselves accordingly. Akamai Technologies, Inc. (AKAM), Goldcorp Inc. (GG), and Visa Inc. (V) are all scheduled to unleash their first-quarter results after tonight's closing bell, so let's take a quick look and find out what speculators are expecting.
First up, Akamai Technologies, Inc. (AKAM) is expected to report a profit of 31 cents per share, down from 43 cents per share in the year-ago period.** AKAM has exceeded analysts' expectations in three of the past four reporting periods.
Put volume has ramped up to five times the norm already today, continuing a recent trend toward puts over calls -- AKAM's Schaeffer's put/call open interest ratio (SOIR) of 1.29 ranks in the 75th annual percentile. However, traders aren't necessarily betting bearishly. The most active strike is AKAM's out-of-the-money May 30 put, where 1,669 contracts have traded. With the majority of these puts changing hands at the bid price, it looks like traders are selling puts at this strike today.
Meanwhile, analysts are looking for Goldcorp Inc. (GG) to bank a first-quarter profit of 25 cents per share, up from 23 cents per share in the first quarter of 2009. Like AKAM, GG has topped Wall Street's consensus earnings estimates in three of the past four quarters.
Calls are the options of choice today, with volume climbing to two times the usual level. With GG hovering just shy of $42, traders are focusing their efforts on the equity's May 40, 41, and 42 calls. The May 40 strike is most popular, with 8,149 contracts in residence, but the May 42 call has traded volume of 2,239 contracts on open interest of 7,349 -- so we could see this latter option snag the title of peak call open interest tomorrow.
Finally, Visa Inc. (V) is expected to announce a profit of 91 cents per share, up from 73 cents per share in the year-ago quarter. Visa has handily surpassed analysts' expectations in each of the past four reporting periods.
Calls have rarely been in greater demand on V, with the stock's 10-day International Securities Exchange (ISE) call/put volume ratio of 4.37 ranking higher than 93% of other such readings taken during the past year. However, one bullish speculator hedged his bets today by opening a long call spread on V -- the trader purchased 150 May 100 calls, and simultaneously sold 150 May 105 calls. Those sold calls will lower the trade's cost of entry and breakeven point, but they also cap the trader's profit potential.
**Updated: AKAM's year-ago numbers were not fully taxed, so this is not an apples-to-apples comparison. On a fully taxed basis, AKAM earned 31 cents per share in the first quarter of 2009 -- so the projected consensus estimate of 31 cents for tonight's report would represent no year-over-year change to AKAM's bottom-line results.