This Blockchain Stock Could Be Headed Higher After Earnings

Overstock.com has a history of positive earnings reactions

Managing Editor
Jan 26, 2018 at 3:26 PM
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Overstock.com Inc (NASDAQ:OSTK) is tentatively scheduled to report fourth-quarter earnings after next Monday's close. Below, we will take a look at how OSTK stock has been faring on the charts, and how options traders are speculating on the blockchain name.

Looking closer, Overstock.com has had an astounding run recently, gaining more than 344% over the past six months and touching an all-time high of $89.80 on Jan. 8. The stock's meteoric rise came after the e-commerce concern said it had shifted its focus to blockchain technology. At last check, OSTK was up 0.4% to trade at $74.25, buoyed by familiar support from its rising 30-day moving average.

The stock could be headed higher, too, should the company report earnings next week. OSTK has been higher the day after earnings in seven of the last eight quarters --  including a 30.7% surge last November. The shares have averaged a single-session post-earnings swing of 8.7% in either direction, looking back two years. This time around, the options market is pricing in a larger-than-usual 12% move, per at-the-money implied volatility data.

Analysts have been sitting on the sidelines during OSTK's surge. Of the 26 brokerages covering OSTK, 14 rate the shares a "hold" or "sell." Another positive earnings reaction could spark a round of upgrades, which may provide more tailwinds for the shares.

Options traders, on the other hand, have been bullish in recent weeks. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), OSTK's 10-day call/put volume ratio stands at a top-heavy 1.75.

These call buyers could be in luck, too, with Overstock's Schaeffer's Volatility Scorecard (SVS) perched at 92 (out of 100). What this means is that the stock has made larger moves on the charts in the past year, relative to options traders' expectations -- a boon to premium buyers.

 

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