Earnings Preview: Oracle Corporation, The Kroger Co., and Rite Aid Corporation

Analyzing pre-earnings option trends on Oracle Corporation (ORCL), Kroger Co (KR), and Rite Aid Corporation (RAD)

by Andrea Kramer

Published on Jun 17, 2015 at 11:22 AM

Among the companies about to step up to the earnings plate are software issue Oracle Corporation (NYSE:ORCL), grocery chain Kroger Co (NYSE:KR), and pharmacy concern Rite Aid Corporation (NYSE:RAD). Below, we'll take the pre-earnings temperature of ORCL, KR, and RAD. 

  • ORCL will unveil its fiscal fourth-quarter figures after the close today. The stock has averaged a single-session post-earnings move of 4.6% over the last eight quarters, and reacted positively after its last two reports. This time, the options market is pricing in a 3.9% swing in either direction, judging by the security's short-term at-the-money (ATM) straddle. On the charts, Oracle Corporation has sashayed steadily higher over the past two years, but has spent most of 2015 bumping up against resistance in the $45 neighborhood. The shares were last seen near breakeven at $44.64, but option buyers might be banking on a breakout. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day call/put volume ratio of 2.38 stands higher than 79% of all other readings from the past year, reflecting a healthier-than-usual appetite for long calls over puts during the past 10 weeks.
  • KR is scheduled to report first-quarter earnings bright and early tomorrow. The stock has enjoyed four straight positive earnings reactions, advancing 6.7% in the session after its last earnings report. Over the past eight quarters, Kroger Co has averaged a one-day move of 3.6%, and option traders this go-round are pricing in a 3.9% move, according to the equity's short-term ATM straddle. The shares have taken a breather since touching an all-time high of $77.74 in mid-March, and were last seen in the $72.91 vicinity. Another strong earnings showing could shake loose some of the recent option bears, as the stock's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.52 registers in the 82nd percentile of its annual range. A mass exodus of skeptics could send KR to its next high.
  • Finally, RAD will also report first-quarter earnings ahead of the bell tomorrow. The stock has made some dramatic post-earnings moves in both directions during the past eight quarters, averaging a one-day reaction of 10.7%. Option players are pricing in a much milder swing of 5.9% this time, judging by Rite Aid Corporation's short-term ATM straddle. On the charts, RAD has advanced 18.4% in 2015, and was last seen at $8.90 -- just a stone's throw from its 14-year peak of $9.07, tagged in early April. In fact, the shares hit an intraday high of $9.06 today. While option buyers have been picking up bullish bets at a quicker-than-usual step -- the equity's 10-day ISE/CBOE/PHLX call/put volume ratio of 5.4 is higher than 68% of all other readings from the past year -- an unwinding of short interest in the wake of an earnings win could propel RAD even higher.

A Schaeffer's exclusive

6 Sectors for Summer

Access your FREE insider report before it's too late!


  
 

Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


The Next Big Player in U.S. MJ Boom
Most pure-play marijuana stocks in the U.S. trade on the Over-the-Counter stock exchange.
Wall Street Roars Higher Amid Civil Unrest
Investors weighed a mixed bag of jobs data
AstraZeneca Stock Flat Despite COVID-19 Vaccine News
AstraZeneca saw a rise in capacity for its COVID-19 vaccine candidate
The Next Big Player in U.S. MJ Boom
Most pure-play marijuana stocks in the U.S. trade on the Over-the-Counter stock exchange.