Akamai Technologies Stock Tends to Make Big Moves After Earnings

AKAM shares have swung nearly 10%, on average, the day after earnings

by Emma Duncan

Published on Apr 27, 2018 at 1:42 PM

IT services and consulting name Akamai Technologies, Inc. (NASDAQ:AKAM) will continue the theme of tech earnings next week, and is slated to release its first-quarter report Monday evening. AKAM stock has gained 52% over the past nine months, and enjoyed an impressive bull gap in mid-December, after hedge fund Elliot Management reported a 6.5% stake in the company, calling AKAM stock "significantly undervalued." Subsequent pullbacks in the shares have been contained by their 50-day moving average.

Daily Chart of AKAM with 50day

Looking at its earnings history, AKAM stock has finished higher the day after reporting in the past two quarters, including a 4% jump following its October report. The stock's average post-earnings daily price move is healthy 9.7%, regardless of direction, looking back two years. This time around, the options market is pricing in a slightly lower-than-usual 9.4% next-day move in either direction, per at-the-money implied volatility data. At last check, AKAM stock was fractionally lower at $71.37. A 9.4% move to the upside would put the shares around $78.07 -- within a chip-shot of March's two-year high.

Ahead of earnings, options traders have been leaning bullishly towards the tech name. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows AKAM with a 50-day call/put volume ratio of 4.68, ranking in the 98th percentile of its annual range. While absolute volume runs light, this suggests calls have been purchased over puts at a much faster-than-usual clip over the past 10 weeks.

Akamai Technologies has handily rewarded premium buyers over the past year. The tech stock currently sports a Schaeffer's Volatility Scorecard (SVS) of 89 out of 100. This means the equity has tended to register bigger price swings than its options premiums have priced in over the past 12 months.
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