Options Traders Brace for Inaugural Roku Earnings Report

The options market is pricing in a large post-earnings swing for Roku shares

Nov 7, 2017 at 4:13 PM
facebook X logo linkedin


Earnings season continues this week, as traders today digested negative reactions from travel and drug stocks alike. After the close Wednesday, Wall Street will hear from TV streaming platform provider Roku Inc (NASDAQ:ROKU) -- marking its first earnings report as a publicly traded company. Here's a closer look at what ROKU options traders are expecting from the entertainment stock ahead of the big event.

Options Market Prices In Big Earnings Swing For Roku Shares

On just its second day of trading back on Sept. 29, Roku stock touched a record high of $29.80. The shares have since fallen 36% to trade at their current level of $19.13. Although the security sits well above its September initial public offering (IPO) of $14, an post-earnings dip could send the stock closer to its Sept. 28 all-time low of $15.75.

For Thursday's post-earnings session, the options market is pricing in a rather big swing of 21%, per at-the-money implied volatility (ATM IV) data from Trade-Alert. Based on the stock's current price, a drop of this magnitude would send the security down to a record low of $15.11. On the chance that the equity rallies after earnings, ROKU shares could jump back up to the $23.15 neighborhood -- territory the security hasn't visited since mid-October.

Bullish Options Traders Remain Hopeful

In fact, options traders could be hoping for a post-earnings pop. Today, calls changed hands at double the expected daily pace, with speculators possibly purchasing new positions at the weekly 11/10 20-, 21-, and 22.50-strike calls.

Plus, the security's 10-day call/put volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits at 1.53. This tells us that options players have bought to open more calls than puts during the past two weeks.

Regardless of how options traders are leaning, it's getting pricey to buy premium on short-term options. ROKU's 30-day ATM IV of 93.9% ranks at its highest level yet, indicating elevated volatility expectations are being priced into near-term contracts.

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI