Earnings Preview: Kinross Gold Corporation, Electronic Arts Inc., and Canadian Solar Inc.

Kinross Gold Corporation (USA) (NYSE:KGC), Electronic Arts Inc. (NASDAQ:EA), and Canadian Solar Inc. (NASDAQ:CSIQ) are on deck to report earnings

by Karee Venema

Published on May 10, 2016 at 1:55 PM

Although the bulk of earnings season has passed, there are still plenty of notable names that have yet to report. Tonight, for instance, gold miner Kinross Gold Corporation (USA) (NYSE:KGC) and video game maker Electronic Arts Inc. (NASDAQ:EA) will report earnings, while alternative energy firm Canadian Solar Inc. (NASDAQ:CSIQ) will step up to the plate tomorrow morning. Here's a quick look at the pre-earnings options activity surrounding KGC, EA, and CSIQ.

  • Long calls have been popular on KGC in recent weeks, per the stock's top-heavy 20-day call/put volume ratio of 4.29 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). While KGC's January 2017 6-strike call has seen the biggest rise in open interest over the past 10 sessions, shorter-term call buyers have targeted the May 6 strike. By initiating new long positions here, options traders expect KGC to rally north of $6 by next Friday's close -- when the front-month series expires -- territory not charted since August 2013. However, the shares of Kinross Gold Corporation have been rising in step with gold futures -- up 195% year-to-date at $5.36, and are fresh off a May 2 two-year high of $5.82.

  • Short-term options traders are more call-heavy than usual toward EA, per the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.71 -- in the 29th percentile of its annual range. If past is precedent, those buying to open calls could be hitting the bricks after tomorrow's results. Specifically, the stock has averaged a single-session post-earnings loss of 4.6% over the past three quarters. More broadly speaking, EA is down 6.2% year-to-date at $64.45, with recent rally attempts quickly halted in the $67 region. Should Electronic Arts Inc. take another post-earnings swoon, analysts may be encouraged to downgrade the stock -- pressuring the shares even lower. Currently, 87% of brokerages maintain a "buy" or better rating, with not a single "sell" to be found.

  • Pre-earnings options traders have been lining up on the bullish side of the fence for CSIQ -- hoping the solar stock doesn't follow in the footsteps of SolarCity Corp (NASDAQ:SCTY). At the ISE, CBOE, and PHLX, for instance, CSIQ's 10-day call/put volume ratio of 4.29 sits higher than 82% of all comparable readings taken in the past year. Those purchasing the stock's near-term options are willing to pay a pretty penny, too. Specifically, CSIQ's Schaeffer's Volatility Index (SVI) of 91% arrives in the 80th annual percentile, meaning premium on the equity's short-term options is pricing in heightened volatility expectations. On the charts, Canadian Solar Inc. (NASDAQ:CSIQ) is down 60% year-over-year to $15.58, and hit a 2016 low of $15.02 earlier.
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