Earnings Preview: AT&T Inc., Coach Inc, and 3M Co

AT&T Inc. (T), Coach Inc (COH), and 3M Co (MMM) will report earnings tomorrow

Jan 25, 2016 at 2:35 PM

Tomorrow is a huge day for quarterly earnings, with a majority of the attention being focused on Apple Inc. (NASDAQ:AAPL). However, by no means is the iPhone parent the only company scheduled to report. Three other major firms headed to the earnings booth Tuesday are telecom titan AT&T Inc. (NYSE:T), accessories designer Coach Inc (NYSE:COH), and blue chip 3M Co (NYSE:MMM). Below, we'll take the pre-earnings temperature of T, COH, and MMM.

T is scheduled to tell all tomorrow night, and ahead of the event, short-term option traders have rarely been more call-skewed. The stock's Schaeffer's put/call open interest ratio (SOIR) of 0.52 indicates calls nearly double puts among options with a shelf-life of three months or less, while ranking in the low 5th percentile of its annual range. Meanwhile, the options market is pricing in a 3.3% swing for AT&T Inc. in the session subsequent to reporting -- larger than the average single-day move of 1.8% over the past eight quarters. Technically speaking, T is 0.5% higher today at $35.30, and has been stair-stepping its way higher since hitting a three-year low of $30.97 in late August.

COH will report earnings bright and early on Tuesday, and ahead of the event, the stock's short-term options are growing historically expensive. This, based on Coach Inc's 30-day at-the-money (ATM) implied volatility (IV), which has shot nearly 10% higher to 47.3%, registering in the 96th percentile of its annual range. Shifting gears, traders in recent sessions have been betting bearishly on the shares, buying to open more than three times as many puts as calls. COH's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 3.17 outstrips 97% of comparable readings from the past year. It's no wonder, either. COH has been a disaster on the charts, losing 4.2% today at $31.06 -- and down 29% since hitting an annual high of $43.87 in early March. Today, however, the stock's calls are running at five times the usual intraday rate and twice the pace of puts, with potential buy-to-open action at the February 32 and 33 calls.

MMM hasn't fared much better from a technical standpoint. Since its most recent high of $160.09 in early November, the stock has shed 13.4% to trade at $138.52. Not surprisingly, bearish betting has been feverish at the ISE, CBOE, and PHLX, based on 3M Co's 50-day put/call volume ratio of 1.96 -- just 2 percentage points from an annual high. Looking ahead, the firm will report earnings before the open tomorrow. Ahead of the event, premium on MMM's short-term options is growing expensive, based on rising a volatility expectations. Specifically, the stock's 30-day ATM IV is up 6% this afternoon at 24.2%, which ranks in the 91st percentile of its annual range.

Follow @Schaeffers

The $25K Day Trading Barrier is Gone

The long-standing Pattern Day Trader (PDT) rule that required many traders to maintain a $25,000 account balance is no longer standing in the way.

That means more traders can actively pursue short-term opportunities without the barrier that kept so many on the sidelines.

Now it's all about having the right strategy.

Dynamite Day Trading Signals helps you hit the ground running with up 2 options trade alerts per week, built to capture fast-moving opportunities.

👉 Sign up now to receive the next trade