Earnings Preview: BlackBerry Ltd and Finish Line Inc

Analyzing recent option activity ahead of earnings on BlackBerry Ltd (NASDAQ:BBRY) and Finish Line Inc (NASDAQ:FINL)

by Karee Venema

Published on Sep 24, 2015 at 10:34 AM
Updated on Sep 24, 2015 at 10:38 AM

It's the tail end of earnings season, but a handful of stragglers are still making their way up to the plate. Specifically, smartphone maker BlackBerry Ltd (NASDAQ:BBRY) and athletic apparel issue Finish Line Inc (NASDAQ:FINL) are slated to unveil their quarterly earnings reports tomorrow morning. Below, we'll take the pre-earnings temperature of BBRY and FINL.

  • Over the past eight quarters, BBRY has averaged a single-session post-earnings swing of 5.6%, but this time around, the equity's near-term at-the-money (ATM) straddle is projecting a bigger 7.2% move. Option traders, it appears, have been betting on a move to the upside, considering the stock's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 5.39 ranks in the 97th annual percentile. In other words, calls have been bought to open over puts at a faster clip just 3% of the time within the past year.

    Meanwhile, despite the uncertainty surrounding tomorrow's big event, the equity's near-term options are pricing in relatively tepid volatility expectations. Specifically, BBRY's Schaeffer's Volatility Index (SVI) of 57% rests higher than 43% of all similar readings taken in the past year. Technically speaking, BlackBerry Ltd has tacked on 10.1% since hitting an annual low in late August, and was last seen lingering near $7.06.

  • Unlike the optimism seen among the brokerage bunch, put buyers have taken the lead in FINL's options pits. In fact, the equity's 50-day ISE/CBOE/PHLX put/call volume ratio of 1.70 ranks in the bearishly skewed 78th percentile of its annual range. Echoing this is the security's Schaeffer's put/call open interest ratio (SOIR) of 1.01, which sits lower than 23% of all similar readings taken in the past year. Simply stated, short-term speculators are more put-heavy than usual.

    Looking back over the previous eight quarters, the stock has made three significant post-earnings moves to the downside, while on an absolute basis, has averaged a move of 7.3%. In tomorrow's trading, FINL's near-term ATM straddle is pricing in a loftier swing of 10.6%. On the charts, Finish Line Inc has not performed nearly as well as rival Foot Locker, Inc. (NYSE:FL) -- or its blue-chip supplier, Nike Inc (NYSE:NKE), which will tell all in the the earnings confessional later today -- up 1.8% year-to-date to trade at $24.74.

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