Earnings Preview: Amazon.com, Inc., Starbucks Corporation, and Juniper Networks, Inc.

Analyzing pre-earnings options trends on Amazon.com, Inc. (NASDAQ:AMZN), Starbucks Corporation (NASDAQ:SBUX), and Juniper Networks, Inc. NYSE:JNPR)

by Karee Venema

Published on Jul 23, 2015 at 1:53 PM
Updated on Jul 23, 2015 at 1:54 PM

It's been a hot-and-cold start to earnings season, with notable names such as Apple Inc. (NASDAQ:AAPL) and Microsoft Corporation (NASDAQ:MSFT) tumbling in the wake of their results, while others such as Google Inc (NASDAQ:GOOGL) and SanDisk Corporation (NASDAQ:SNDK) soared following their reports. There's still plenty of action on tap, too, with e-commerce issue Amazon.com, Inc. (NASDAQ:AMZN), coffee concern Starbucks Corporation (NASDAQ:SBUX), and networking specialist Juniper Networks, Inc. (NYSE:JNPR) all reporting after tonight's close. Below, we'll take the pre-earnings temperature of AMZN, SBUX, and JNPR.

  • Over the past eight quarters, AMZN has averaged a single-session post-earnings move of 9.9%. The options market has upped their forecast for this time around, now expecting AMZN to swing 9.4% in the session subsequent to reporting -- based on the stock's near-term at-the-money (ATM) straddle. It appears option traders are expecting the action to resolve to the downside. Specifically, AMZN's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.90 ranks in the 71st annual percentile. Regardless, premium on the equity's short-term options is currently pricing in relatively high volatility expectations. In fact, the stock's Schaeffer's Volatility Index (SVI) of 47% is docked 13 percentage points from a 52-week peak. On the charts, Amazon.com, Inc. has added an impressive 55% year-to-date to trade at $481.38, and hit an analyst-induced record peak of $493.20 on Monday.

  • Call buyers have been flooding SBUX's options pits ahead of tonight's results. At the ISE, CBOE, and PHLX, the stock's 50-day call/put volume ratio of 2.19 sits higher than 89% of all comparable readings taken in the past year. Short-term speculators are willing to pay inflated premiums, as well, considering the equity's 30-day ATM implied volatility (IV) of 25.4% rests in the 95th percentile of its annual range. Historically, SBUX has averaged a single-session post-earnings move of 3.3% over the past eight quarters -- six of which have been to the upside. Looking at the equity's near-term ATM straddle reveals the options market is expecting a bigger move of 4.4% for tomorrow's trading. Today, the stock is flirting with a 0.1% lead at $56.73, and earlier topped out at an all-time high of $57, after announcing a new partnership with car service Lyft

  • JNPR is also higher this afternoon -- up 0.7% at $26.38, and extending its year-to-date advance to 18.1%. In fact, the stock is within striking distance of its May 27 annual high of $28.26. In the options pits, speculators have been initiating long calls over puts at a near-annual-high clip in recent months, per JNPR's 50-day ISE/CBOE/PHLX call/put volume ratio of 2.91 -- in the 96th annual percentile. Meanwhile, the stock's 30-day ATM IV of 42.3% is just 1 percentage point off of a 12-month peak. Looking back over the past eight quarters, Juniper Networks, Inc. has experienced a post-earnings swing -- on average -- of 5.9%. This time, the stock's near-term ATM straddle is suggesting a bigger 8% move.

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