Options Traders Split On Hertz, AutoZone Stocks Before Earnings

Hertz will report earnings after the close tomorrow

Managing Editor
Feb 26, 2018 at 1:14 PM
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Car rental concern Hertz Global Holdings, Inc (NYSE:HTZ) is slated to report earnings after the close tomorrow, and auto parts supplier AutoZone, Inc. (NYSE:AZO) will report before the open. Below, we'll take a look at HTZ and AZO's earnings history, and how the stocks have been faring.

Hertz Stock Sees Heavy Call Buying

At last check, Hertz stock was down 1.8% to trade at $20.29. The shares dipped earlier this month with the broader market, but the pullback was contained by their 200-day moving average. This trendline also offered firm support back in November.

Looking back, Hertz has a mixed history. Last quarter the shares slipped 2.2% the day after earnings, and back in May they fell 14.2% the session after reporting. But in this quarter last year HTZ jumped 13.6% after earnings. This time around, the options market is pricing in a larger-than-usual 20.6% move for Wednesday's trading, going by implied volatility (IV) data.

Nevertheless, options traders have been focusing on calls lately. Data from International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows HTZ with a 10-day call/put volume ratio of 4.06, which ranks in the 89th percentile of its annual range. This indicates calls have been purchased over puts at a faster-than-usual clip over the past two weeks. 

Meanwhile, the stock's Schaeffer's Volatility Scorecard (SVS) stands at 89. This tells us that Hertz shares have handily exceeded options traders' volatility expectations during the past year.

Put Buyers Pile On AutoZone Stock Ahead Of Earnings

At last check, AutoZone stock was down 0.9% to trade at $718.47. The shares raced to an annual high of $797.89 on Jan. 19. The shares recently found support at their 80-day moving average, a trendline that at the time coincided with a 38.2% Fibonacci retracement of the stock's rally from its 2017 lows to its early 2018 high. AZO is now testing a 23.6% Fibonacci retracement of the same levels.

autozone stock today

AutoZone stock has a shaky history of post-earnings reactions. The stock has ended lower the day after earnings in four of the past eight quarters, including a drop of 5% in September and 11.8% in May. Overall, the shares have averaged a post-earnings move of 2.0% in either direction in the session after the company reports, looking back eight quarters. For this particular quarterly report, however, the options market is pricing in a larger-than-usual 9.2% move for tomorrow, going by implied volatility (IV) data.

In the options pits, puts have been quite popular lately. ISE, CBOE, and PHLX data shows AZO stock with a 10-day put/call volume ratio of 1.36, which ranks in the 86th percentile of its annual range -- though volume has been light on an absolute basis. Shifting gears to today, puts are trading at two times the intraday rate ahead of earnings, and the most popular by far is the weekly 3/2 705-strike put.


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