Earnings Preview: Silver Wheaton, AOL, and JD.com

Analyzing recent option activity ahead of earnings from Silver Wheaton Corp. (USA) (NYSE:SLW), AOL, Inc. (NYSE:AOL), and JD.com Inc (ADR) (NASDAQ:JD)

May 7, 2015 at 3:04 PM
facebook twitter linkedin


Among the stocks gearing up to report earnings tomorrow are mining concern Silver Wheaton Corp. (USA) (NYSE:SLW), Internet provider AOL, Inc (NYSE:AOL), and China-based e-commerce company JD.com Inc (ADR) (NASDAQ:JD). Below, we'll take the pre-earnings temperature of SLW, AOL, and JD. 

  • SLW has been lackluster on the charts, with the shares down 3.6% year-to-date to hover near $19.59. However, traders have shown a preference for calls over puts in the options pits, as Silver Wheaton Corp.'s 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 3.93 is higher than 70% of all similar readings from the past year. On the earnings front, the stock has moved an average of 2.4% in the session immediately following its last four earnings reports. Accordingly, after SLW steps into the earnings confessional later tonight, the options market is pricing in a single-session move of 2.8%, per the equity's short-term at-the-money (ATM) straddle. Near-term traders are paying middling prices, historically speaking, as SLW's Schaeffer's Volatility Index (SVI) of 40% stands in the 50th percentile of its annual range.  
  • The shares of AOL have rebounded 4.4% since notching a year-to-date low of $38.12 on April 6, last seen at $39.80. What's more, the shares gained 0.8% so far today, ahead of tomorrow morning's earnings release. Not surprisingly, calls have been prominent in the options pits, as AOL, Inc.'s 50-day ISE/CBOE/PHLX call/put volume ratio of 1.46 reads in the 60th percentile of its annual range. Elsewhere, AOL has experienced an average single-session post-earnings move of 10.5% following its last four earnings reports. According to the stock's near-term ATM straddle, the options market expects the stock to move 8.8% by tomorrow's close. Short-term options are available for relatively inflated prices, as AOL's 30-day at-the-money implied volatility (IV) of 47.4% is higher than 85% of all equivalent readings from the last 12 months. 
  • Although JD has been a technical outperformer in 2015, the shares have taken a step back lately, down 10.3% from their April 27 all-time high of $36.75 to linger near $32.95. Additionally, the shares recently retreated beneath their 20-day moving average, which has served as support for most of 2015. Looking to the options pits, traders have been picking up puts -- over the past 10 days at the ISE, CBOE, and PHLX, 1.78 JD.com Inc puts have been bought to open for every call. Meanwhile, JD has spent its only three post-earnings sessions in the red, with the shares experiencing an average loss of 3.7%. After JD releases its earnings tomorrow morning, the options market expects the equity to move 7.2% by the close, per its near-term ATM straddle. Near-term options players are paying up for their bets, from a historical standpoint, as JD's SVI of 69% stands in the 77th percentile of its annual range. 
 

Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 

 

300x250 - Banner 3 - v1