Earnings Preview: Alphabet Inc, Amazon.com, Inc., and Baidu Inc

Tech firms Alphabet Inc (NASDAQ:GOOGL), Amazon.com, Inc. (NASDAQ:AMZN), and Baidu Inc (ADR) (NASDAQ:BIDU) will report earnings tomorrow night

by Karee Venema

Published on Jul 27, 2016 at 2:22 PM
Updated on Jun 24, 2020 at 10:16 AM

Earnings season has kicked into high gear, with tech stocks Apple Inc. (NASDAQ:AAPL) and Twitter Inc (NYSE:TWTR) seeing big reactions in the wake of their respective results. While AAPL supplier Cirrus Logic, Inc. (NASDAQ:CRUS) and TWTR peer Facebook Inc (NASDAQ:FB) will take their turn on the earnings stage after tonight's close, tech firms Alphabet Inc (NASDAQ:GOOGL), Amazon.com, Inc. (NASDAQ:AMZN), and Baidu Inc (ADR) (NASDAQ:BIDU) are slated to unveil their quarterly reports tomorrow night. Here's a closer look at the options activity surrounding GOOGL, AMZN, and BIDU ahead of earnings.

Pre-earnings call buyers have been active in GOOGL's options pits, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, the stock sports a top-heavy 10-day call/put volume ratio of 2.07 across this trio of exchanges -- in the 88th annual percentile. Even with the uncertainty of earnings looming, short-term volatility expectations are currently near their lowest point of the year -- a potential boon for options buyers. In fact, GOOGL's Schaeffer's Volatility Index (SVI) of 33% rests lower than 99% of all comparable readings taken in the past year.

Technically, Alphabet Inc has rallied nearly 13% since taking a bounce off its 320-day moving average during the post-"Brexit" broad-market plunge. However, the shares are running out of steam near the $760 mark -- an area that helped support GOOGL in early April -- last seen at $759.93.

AMZN has seen a rise in call buying in the weeks leading up to the release of its earnings report. At the ISE, CBOE, and PHLX, the stock's 10-day call/put volume ratio of 1.19 rests in the 73rd percentile of its 12-month range. Meanwhile, it's getting pretty pricey for those purchasing the stock's near-term options. Not only does AMZN's SVI of 41% rest higher than 61% of all other readings taken in the past year, but its 30-day at-the-money implied volatility of 36.6% is docked in the slightly inflated 59th annual percentile.

Looking back over the past eight quarters, AMZN has averaged a single-session post-earnings move of 9.9% -- slightly less than the 10.9% the options market is expecting this time around. On the charts, the stock has put in a standout performance in recent months, and analysts have been quick to take note. Based on their present price at $736.91, shares of Amazon.com, Inc. have surged more than 55% off their mid-February low at $474 -- notching a record high of $757.34 on July 12.

BIDU has turned in a number of volatile post-earnings performances over the last eight quarters, swinging, on average, 7.6% in the session subsequent to reporting. For Friday's trading, the options market is pricing in a bigger move of 9.9%. It looks like options traders are expecting this post-earnings price action to resolve to the downside, too. At the ISE, CBOE, and PHLX, BIDU's 10-day put/call volume ratio of 0.96 ranks in the 83rd annual percentile. Plus, the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.11 sits just 3 percentage points from a 52-week peak.

Outside of the options arena, analysts have taken a decidedly optimistic tone toward Baidu Inc, with 86% maintaining a "buy" or better rating, and not a single "sell" to be found. Another big post-earnings move for BIDU could escalate amid a shift in sentiment among options traders or analysts. Technically, BIDU is down 13% year-to-date, last seen at $163.93.

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