Box Stock Options Price In Post-Earnings Volatility

Box stock plunged more than 23% following the company's last earnings report

Managing Editor
May 29, 2018 at 12:31 PM
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Cloud storage concern Box Inc (NYSE:BOX) is slated to report first-quarter earnings after the market closes tomorrow, May 30. The tech stock has been moving higher on the charts ahead of the company's earnings release -- thanks to a late-April bounce off its 200-day moving average. After hitting its May 10 record high of $28.68, the stock consolidated some of these gains near the $26 level, home to a 23.% Fibonacci retracement of its recent surge, and its 20-day moving average. At last check, BOX has erased its earlier gains to trade down 1.4% at $27.03.

Daily Chart of BOX With 20MA

Digging into its earnings history, BOX stock has posted a negative next-day return after six of the last eight reports, including a 23.3% drop last quarter. Overall, the stock has averaged a one-day post-earnings swing of 7.4% over the past two years, regardless of direction. This time around, the options market is pricing in a much larger-than-usual 12.1% next-day move, per data from Trade-Alert.

In the options pits, traders have been bullish, with Box stock's 50-day call/put volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) of 4.30 ranking in the 86th annual percentile. This high percentile suggests that BOX calls have been purchased over puts at a faster-than-usual clip during the past 10 weeks.

Analysts are mostly upbeat, as well. Of the 11 brokerage firms following the cloud storage stock, eight currently sport "buy" or "strong buy" ratings. The stock's average 12-month price target of comes in at $26.64, however, a nearly 2% discount to current levels.

Elsewhere, short interest on BOX surged nearly 38% during the past two reporting periods, and now accounts for just under 9% of the stock's total available float. This level is far from extreme, though, considering it would take fewer than two days to cover these bearish bets, at Box stock's average daily trading volume.

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