Traders See Another Crazy Post-Earnings Plummet for El Pollo Loco Stock

Heading into the earnings confessional after Thursday's close, restaurant stock El Pollo LoCo Holdings, Inc. (NASDAQ:LOCO) is parked near the supportive $12 mark, which has been keeping pullbacks in check in recent months. The shares have done little to impress traders of late, though, with the overhead $13.50-$14 region shutting down the stock's advances since last May, with the shares last seen at $11.90. LOCO also has a history of huge losses in the session subsequent to reporting earnings, so it's no surprise traders and analysts have been taking a dim view of the stock ahead of tomorrow's event.

Over the past eight quarters, LOCO shares have moved higher in the post-earnings session only once -- two years ago -- and finished one session unchanged. The remaining six events saw the stock plummet an average of 13.6%. Options traders are currently pricing in a 14% swing in either direction for Friday, but with options volume nearly nonexistent, it looks like speculators are largely choosing to sit on the sidelines.

This appears to be par for the course of late, as LOCO's total options open interest is seated in the low 11th percentile of its annual range, with just 11,749 total contracts outstanding. For those who have gotten in on the action lately, though, puts have been the options of choice. Across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), options traders have purchased 1.65 puts for every call over the past 10 days. What's more, this put/call volume ratio ranks higher than three quarters of all readings from the past 12 months.

Outside of the options pits, sentiment toward the stock is similarly bearish. For instance, 14.4% of LOCO's available float is currently dedicated to short interest. These pessimistic positions would take more than 12 sessions to buy back, based on the equity's typical pace of trading. Meanwhile, four out of five analysts rate El Pollo LoCo Holdings, Inc. (NASDAQ:LOCO) a lukewarm "hold." While bears clearly have history on their side, an upside surprise after tomorrow's report could cause a major shift in sentiment, perhaps helping the shares breakout out of their recent sideways pattern.