Options Market Braces for Big Earnings Swing for Switch Stock

Short interest accounts for over 17% of the stock's float

Managing Editor
Nov 12, 2018 at 1:00 PM
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Shares of Switch Inc (NYSE:SWCH) are slightly lower in afternoon trading, down 0.9% at $9.21, at last glance, as traders gear up for the company's third-quarter earnings. The security's fifth-ever report is slated to surface after the market closes tomorrow, Nov. 13. Below, we will dive into what the options market is expecting for the stock's post-earnings moves, and take a look at how SWCH has been faring on the charts.

Overall, the technology name has struggled on the charts since its initial public offering (IPO) this time last year. Specifically, a series of post-earnings bear gaps and pressure from the falling 50-day moving average have contributed to the stock's underperformance. Year-to-date, SWCH has shed 49%.

Daily Chart SWCH 50 MA

Digging into its brief earnings history, SWCH has closed lower the day after all four previous earnings reports, including a 22.4% drop last quarter. Looking broader, the shares have averaged a 14.6% loss the day after earnings. This time around, SWCH options are pricing in a 24% swing for Wednesday's trading.

Lastly, short interest on SWCH represents a healthy 17.3% of the stock's total available float. This means, at the tech name's average pace of trading, it would take short sellers just over seven days to buy back their bearish bets.
 

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