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Ahead of Earnings, Bullish Bettors Zero In on JDS Uniphase Calls

JDSU sees a pre-earnings surge in front-month call volume

by 1/31/2012 3:18 PM
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Bullish options players have flocked toward JDS Uniphase Corporation (JDSU - 12.71) today, as north of 5,500 calls have been exchanged so far, which is approximately 1,800 above the norm. At least 2,617 of these calls were traded at the out-of-the-money February 14 strike -- just over half of them at the ask price, pointing to buyer-driven activity. This option is currently home to peak call open interest of 7,592 contracts, making it difficult to determine whether new positions are being initiated in this session.

This affinity for calls over puts is par for the course on JDSU. The Schaeffer's put/call open interest ratio (SOIR) sits at 0.52, indicating that calls almost double puts among options expiring within three months. This ratio ranks in only the 18th percentile of its annual range, conveying that short-term options players have been more bullishly oriented toward the stock just 18% of the time over the past 12 months.

What's more, JDSU's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio checks in at 9.99, confirming that calls bought to open have outnumbered puts by nearly 10 to one during the last two weeks. In fact, this ratio registers in the 93rd annual percentile, which means that traders have been snapping up bullish bets over bearish at a much faster-than-usual clip.

From a technical standpoint, JDSU has added roughly 22% year-to-date, and has outpaced the broader S&P 500 Index (SPX) by close to 18% during the past 20 sessions. On the charts, the stock is on pace to close a fourth consecutive week above its 10-week and 20-week moving averages, which had served as resistance since May.

It should also be noted that JDSU is scheduled to report its fiscal second-quarter earnings after tomorrow's closing bell, and has bested analysts' bottom-line estimates in all of the past four quarters. At last look, however, the equity is down about 1% to hover at $12.71.


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