Earnings Preview: Intel Corporation, QUALCOMM, Inc., and F5 Networks, Inc.

Intel Corporation (NASDAQ:INTC), QUALCOMM, Inc. (NASDAQ:QCOM), and F5 Networks, Inc. (NASDAQ:FFIV) will report earnings tomorrow night

Karee Venema
Jul 19, 2016 at 3:06 PM
facebook twitter linkedin


Earnings season is kicking into high gear. While financial firms JPMorgan Chase & Co. (NYSE:JPM) and Bank of America Corp (NYSE:BAC) were among the stocks to rally in the wake of their respective results, streaming giant Netflix, Inc. (NASDAQ:NFLX) has not been so lucky. Looking ahead to a week still chock-full of quarterly numbers, tech companies Intel Corporation (NASDAQ:INTC), QUALCOMM, Inc. (NASDAQ:QCOM), and F5 Networks, Inc. (NASDAQ:FFIV) will all take their turns on stage tomorrow night. Here's a quick look at the pre-earnings options activity surrounding INTC, QCOM, and FFIV.

Call buying has been popular on INTC in the weeks leading up to the chipmaker's earnings report. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio of 2.69 ranks just 2 percentage points from a 52-week peak. Even with the uncertainty of earnings looming, those currently purchasing the stock's near-term options are getting a relatively good deal. In fact, INTC's Schaeffer's Volatility Index (SVI) of 21% rests lower than 81% of all comparable readings taken in the past year, meaning volatility expectations are low at the moment.

This bullish positioning is seen outside of the options arena, as well, and with good reason. Shares of Intel Corporation have surged nearly 27% off their mid-February lows near $27.70 to trade at $35.10. Over the past eight quarters, meanwhile, INTC has averaged a single-session post-earnings swing of 3.8%, less than the 5.9% the options market is pricing in this time around.

Next up, QCOM has moved an average of 6.8% in the session subsequent to reporting over the last eight quarters. For Thursday's trading, the options market is expecting a slightly bigger 7.1% swing. In recent weeks, a number of call players have targeted the stock's August 55 strike, which has seen the biggest rise in open interest over the last 10 sessions. However, according to the major options exchanges, it seems a healthy portion of these calls were sold to open, meaning speculators are betting on $55 to serve as a short-term ceiling. Today, the shares of QUALCOMM, Inc. are down 0.5% at $55.05. Longer term, the stock is up 10% on the year, but has struggled recently in the $55-$56 region.

Options volume has been relatively low in FFIV's options pits of late, with the stock sporting an average daily volume of just 649 contracts. Today, however, more than 3,500 options have changed hands -- in the 87th annual percentile. Calls are more than doubling puts, too, echoing the recent trend seen in FFIV's options pits. In fact, over the past 10 sessions, speculative players have bought to open 2.35 calls for every put at the ISE, CBOE, and PHLX, a ratio that rests higher than 80% of all comparable readings taken in the past year.

Technically, the shares of F5 Networks, Inc. have tacked on 25% in 2016. The stock is continuing this momentum today -- last seen up 4.5% at $121.04, amid rumors it could be the next takeover target for private-equity firm Thoma Bravo.

Let us help you profit from market volatility. Target big gains in short order with a 30-day trial of Schaeffer's Weekly Volatility Trader!

A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earnings guide for Q3 before it's too late!


  
 

Partnercenter