Earnings Preview: Mobileye NV, Chesapeake Energy Corporation, and Transocean LTD

Mobileye NV (MBLY), Chesapeake Energy Corporation (CHK), and Transocean LTD (RIG) are set to report earnings tomorrow

Feb 23, 2016 at 2:27 PM
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It's already been a busy week for corporate earnings, and the parade continues tomorrow. Specifically, auto software provider Mobileye NV (NYSE:MBLY) will report, along with commodity stocks Chesapeake Energy Corporation (NYSE:CHK) and Transocean LTD (NYSE:RIG). Let's take a pre-earnings look at MBLY, CHK, and RIG. 

  • MBLY will report earnings bright and early tomorrow, and the options market is pricing in a 14.9% move in the ensuing session. Historically speaking, that's a massive swing, considering the shares have averaged a much more modest 2.6% move in the sessions directly following the company's last six quarterly earnings reports. Underscoring expectations of an outsized swing is MBLY's 30-day at-the-money (ATM) implied volatility (IV), which at 78.4% ranks in the 93rd percentile of its annual range.

    Ahead of earnings, Mobileye NV option traders have been placing bearish bets over bullish in recent months. The stock's 50-day put/call volume ratio of 1.51 across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) outstrips 78% of all other readings from the prior year. This bearish bias makes sense in light of MBLY's technical demise, as the stock has plummeted 55% since hitting a record high of $64.48 in mid-August, last seen at $28.97.

  • CHK will also report earnings Tuesday morning, with the options market implying a nearly 32% single-day move. Big intraday swings are nothing new to the stock, which at last check was down more than 6.7% at $2.22 -- continuing its long-term trend lower, as the energy sector gets pummeled on low prices. Year-over-year, in fact, CHK has surrendered close to 90% of its value. Not surprisingly, short sellers have been all over the sinking shares. Over one-third of Chesapeake Energy Corporation's float is sold short, and at its average daily trading levels, it would take almost eight sessions to cover these positions.

  • RIG earnings are due out after the close tomorrow. Ahead of the event, volatility expectations are much higher than usual, per the stock's 30-day ATM IV of 78.3% -- in the 89th percentile of its 12-month range. Currently, the shares are down 2.1% at $8.65, after last week striking an all-time low of $8.08. Nonetheless, short-term option traders are more call-focused now than at any other time in the past 52 weeks. Specifically, Transocean LTD's Schaeffer's put/call open interest ratio (SOIR) of 1.21 is the lowest reading recorded in the prior year. Elsewhere, 36.7% of the stock's float is sold short, which would take two weeks to cover, at RIG's average daily volumes.
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