Procter & Gamble Stock Trades at Key Level Ahead of Earnings

Options traders have been buying more PG puts than calls during the past two weeks

Managing Editor
Jul 30, 2018 at 12:18 PM
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Procter & Gamble Co (NYSE:PG) is slightly lower in afternoon trading, last seen down 0.4% at $80.25. This slight pullback comes just ahead of the stock's fiscal fourth-quarter earning report, which is slated to surface tomorrow, July 31, before the market opens. Below, we will take a look at how the Dow name has been performing on the charts, as well as what the options market is expecting for the stock's earnings reaction.

On the charts, PG has been in a channel of higher lows since bottoming near $70 back in early May, and is now trading right at its 160-day moving average. This trendline currently coincides with the round $80 mark and a 38.2% Fibonacci retracement of the stock's sell-off from late September through early May, which has acted as resistance since March.

Daily Chart of PG with 160Ma and Fib Levels

Looking at Procter & Gamble's earnings history, the stock has closed lower the day after the company reports in three of the last four quarters. On average, the shares have moved 2.9% in the subsequent session over this one-year time frame, regardless of direction. This time around, the options market is pricing in a slightly wider 3.6% move for Tuesday's trading.

Digging into options data, PG's 10-day put/call volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands at 1.47, in the 87th annual percentile. This lofty ranking suggests that Procter & Gamble puts have been purchased over calls at a faster-than-usual clip during the past two weeks.

Analyst sentiment echoes this skepticism, with 12 of the 16 firms covering PG sporting a "hold" or "strong sell" recommendations. Further, the stock's average 12-month price target of $81.38 is roughly in line with current trading levels.

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