This GoPro Supplier Hopes to Buck Ugly Earnings Trend

AMBA stock hasn't enjoyed a positive earnings reaction since June 2016

Managing Editor
Nov 29, 2017 at 3:28 PM
facebook X logo linkedin


While earnings season has mostly wrapped up, some companies are still waiting for their turn in the spotlight. GoPro (GPRO) supplier Ambarella Inc (NASDAQ:AMBA) steps into the earnings confessional this week, reporting third-quarter earnings after the market closes tomorrow. Here's a closer look at AMBA stock's performance lately, and how options traders are playing the GoPro supplier ahead of earnings.

It's been a subpar year for AMBA stock. An earnings-induced bear-gap subsequently sent AMBA to an annual low of $40.06 on Sept. 6, though the stock has recovered about 35% since then. At last check, AMBA was down 2.5% to trade at $54.16, trading right around breakeven for 2017.

The semiconductor name has a dismal history of post-earnings price action, with the shares plummeting in the session following seven of its last eight earnings reports. As alluded to above, AMBA stock fell 22.4% after earnings last September, and suffered a 10.2% post-earnings drop in June. In fact, the security hasn't enjoyed a positive earnings reaction since reporting in June 2016.

The equity has averaged a one-day post-earnings move of 9.4%, regardless of direction, over the last eight quarters. This time around, the options market is pricing in a much larger one-day swing of 14.3%, based on the stock's at-the-money (ATM) implied volatility (IV) data.

Another poor earnings result would be a boon to short sellers. Although short interest decreased during the last reporting period, the 5.1 million shares of AMBA sold short represents a healthy 15% of the stock's total available float, or more than seven sessions' worth of pent-up buying demand.

AMBA options traders, however, have kept the faith. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day call/put volume ratio of 3.80 ranks in the 79th annual percentile, meaning calls have been bought to open over puts at a faster-than-usual pace in the past 10 weeks. However, those buying to open out-of-the-money calls could be Ambarella shorts seeking an options hedge.

 

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