Options Market Pricing in Massive Post-Earnings Move for Square Stock

SQ has moved higher after five of the last six earnings reports

Managing Editor
Feb 26, 2018 at 2:57 PM
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Mobile payment device concern Square Inc (NYSE:SQ) is set to report fourth-quarter earnings after the close on tomorrow. SQ stock has had a stellar year on the charts, picking up over 160%. At last check, shares of the payment concern were trading up 4% at $46.48 -- a mere stone's throw from a fresh record high.

What's more, Square stock has ended higher the day after earnings in five of the past six quarters. Looking back eight quarters, the shares have averaged a post-earnings move of 9.2% in either direction in the session after the company reports. For this particular quarterly report, the options market is pricing in a much larger-than-usual 14.5% move for Wednesday's trading, going by implied volatility (IV) data.

Recent options buyers should also note that SQ sports a high Schaeffer's Volatility Scorecard (SVS) of 92 out of 100. This indicates the shares have easily exceeded options' traders volatility expectations during the past 12 months.

Despite the stock's outperformance of late, just under half of analysts following Square are in the bulls' camp. Specifically, 14 out of 32 brokerage firms maintain tepid "hold" or "strong sell" recommendations, leaving plenty of room for upgrades, should the equity continue its upward trajectory.

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