Earnings Preview: GoDaddy Inc., Plug Power Inc, and NVIDIA Corporation

Analyzing pre-earnings option trends on GoDaddy Inc. (NYSE:GDDY), Plug Power Inc (NASDAQ:PLUG), and NVIDIA Corporation (NASDAQ:NVDA)

Aug 5, 2015 at 11:28 AM
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It's been a busy morning on the earnings front, with Wall Street digesting the latest results -- and big moves -- from one major blue chip and one notable solar name, among many others. The action is set to continue over the next several days, with domain marketplace GoDaddy Inc. (NYSE:GDDY), fuel cell firm Plug Power Inc (NASDAQ:PLUG), and semiconductor specialist NVIDIA Corporation (NASDAQ:NVDA) all on tap to unveil their results. Below, we'll take the pre-earnings temperature of GDDY, PLUG, and NVDA.

  • In its inaugural turn in the earnings confessional in May, GDDY gave back 1% in the subsequent session. This time around, the options market is expecting the stock to swing 9.3%, based on GDDY's near-term at-the-money (ATM) straddle. Speculators have been piling up on puts in the lead-up to tonight's results. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 20-day put/call volume ratio sits at a top-heavy 7.19. What's more, GoDaddy Inc.'s Schaeffer's put/call open interest ratio (SOIR) of 15.77 indicates put open interest outweighs call open interest by a nearly 16-to-1 margin among options set to expire in three months or less. On the charts, the security has pulled back since hitting a post-IPO high of $33 on June 19, off 12.1% at $29.

  • Call buyers have been flooding PLUG's options pits ahead of tomorrow morning's earnings report, per the stock's 50-day ISE/CBOE/PHLX call/put volume ratio of 22.87, which sits in the top percentile of its annual range. Those currently purchasing the stock's short-term options are willing to pay a pretty penny, too -- historically speaking -- considering PLUG's Schaeffer's Volatility Index (SVI) of 94% ranks higher than 82% of all similar readings taken in the past year. Looking back over the past eight quarters, the equity has averaged a single-session post-earnings move of 9.6%, but this time around, PLUG's near-term ATM straddle is pricing in a loftier 13.8% swing. While Plug Power Inc has been a long-term laggard on the charts -- the stock is off 48% year-over-year -- it is higher today, up 2.2% at $2.78.

  • Since bouncing off the $19 level last week, NVDA has tacked on roughly 8% to trade at $20.67 -- and come head-to-head with its 200-day moving average. If past is prologue, the stock could be poised for a big post-earnings move after the firm unveils its quarterly results tomorrow evening. Over the past eight quarters, NVDA has swung -- on average -- 4.9% in the session subsequent to reporting. This time, the options market is pricing in a 6.4% move, based on NVDA's near-term ATM straddle. Option traders, it seems, are expecting this action to resolve to the downside, per the security's 50-day ISE/CBOE/PHLX put/call volume ratio of 1.20, which ranks just 2 percentage points from a 52-week peak. Analysts, meanwhile, have also taken a skeptical stance toward NVIDIA Corporation -- with two-thirds maintaining a "hold" or worse recommendation. However, some of these doubting Thomases have recently begun changing their tune.
 

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