Earnings Preview: LinkedIn Corp, Chevron Corporation, and Exxon Mobil Corporation

LinkedIn Corp (NYSE:LNKD), Chevron Corporation (NYSE:CVX), and Exxon Mobil Corporation (NYSE:XOM) are on deck to report first-quarter earnings

Karee Venema
Apr 28, 2016 at 2:49 PM
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Tech earnings have been in focus this week, with shares of Apple Inc. (NASDAQ:AAPL) and Facebook Inc (NASDAQ:FB) both making big moves in the wake of their company's respective results. Tonight, professional network LinkedIn Corp (NYSE:LNKD) will unveil its first-quarter earnings report, while energy firms -- and Dow components -- Chevron Corporation (NYSE:CVX) and Exxon Mobil Corporation (NYSE:XOM) will report their first-quarter results tomorrow morning. Here's a closer look at the pre-earnings options activity on LNKD, CVX, and XOM.

While analysts have taken a glass-half-empty approach to LNKD of late, options traders have shown a distinct preference for calls over puts. In fact, LNKD's Schaeffer's put/call open interest ratio (SOIR) of 0.58 ranks in the 17th annual percentile, meaning short-term speculators are more call-heavy than usual. Relatively speaking, it's been getting pretty pricey to purchase premium on the stock's near-term options, too, as volatility expectations rise ahead of earnings. Not only does the equity's Schaeffer's Volatility Index (SVI) of 72% rest higher than 74% of all comparable readings taken in the past year, but its 30-day at-the-money (ATM) implied volatility (IV) of 66.9% rests just 7 percentage points from a 52-week peak.

For tomorrow's trading, specifically, the options market is pricing in a single-session post-earnings move of 18%. This is slightly higher than the 15.9% swing the stock has averaged in the session subsequent to reporting over the past eight quarters -- which includes its nearly 44% post-earnings plunge in early February. Since that bear gap, LinkedIn Corp has been churning in the $100-$125 range, last seen up 3.9% today at $123.46.

Put buyers have been piling into CVX's options pits in recent weeks, per the stock's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 2.30 -- in the bearishly skewed 84th percentile of its annual range. Today, CVX's two of the most active options are the weekly 4/29 101-strike and 5/6 99-strike puts, where it looks as if new positions are being purchased. In other words, the put buyers expect CVX to settle south of the strikes at the respective expiration dates of tomorrow's close and next Friday's close. At last check, the stock was off 0.5% at $103.37. Longer term, Chevron Corporation has rallied 37.2% since hitting a year-to-date low of $75.33 on Jan. 20.

Along similar lines, sector peer XOM has seen a rush of bearish betting in the weeks leading up to its big earnings event. At the ISE, CBOE, and PHLX, for instance, the equity's 10-day put/call volume ratio of 3.00 ranks higher than 84% of all comparable readings taken in the past 52 weeks. It's more of the same today, with puts crossing at three times the average intraday rate -- and outpacing calls by a nearly 4-to-1 ratio. Drilling down, it looks like one bearish trader is rolling her May 85 put up to the 87 strike. Elsewhere, new positions are being initiated at XOM's weekly 84-strike put.

Even with earnings on the immediate horizon, premium on the stock's near-term options is pricing in relatively low volatility expectations. In fact, XOM's SVI of 19% ranks in the 24th annual percentile, while its 30-day ATM IV of 17.2% rests lower than 80% of all similar readings taken over the last 12 months. Specifically, the options market is expecting XOM to log a 2.3% post-earnings move in tomorrow's trading -- in line with what the stock has averaged over the past eight quarters. Today, Exxon Mobil Corporation is down 0.1% at $88.33, paring its year-to-date advance to 13.3%.

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