Options Bears Circle Switch Stock Before Earnings

SWCH stock has suffered a negative earnings reaction after its past five reports

Digital Content Manager
Mar 11, 2019 at 1:05 PM
facebook X logo linkedin

Data center concern Switch Inc (NYSE:SWCH) is scheduled to report its fourth-quarter earnings after the close tomorrow, March 12. In anticipation of this report, SWCH stock is up 2.7% at $8.29 -- set to snap a three-day losing streak. Below, we take a look at how Switch shares have been performing on the charts, and what options traders are expecting after earnings.

Since bottoming out at an all-time-low of $6.39 on Dec. 17, SWCH has rallied nearly 30%. However, after running into a roadblock in the $9 area -- where the stock was trading before a post-earnings bear gap in November -- the equity has pulled back, breaching the support of its 20-day moving average.

SWCH Chart March 11

From a longer-term standpoint, SWCH is no stranger to post-earnings bear gaps. It has suffered a negative earnings reaction after each of its last five reports, and averaged a one-day drop of 16.4%. This time around, the options market is pricing in a larger-than-usual 20.1% move for Wednesday's trading. 

As such, it's no surprise that options traders have been upping the bearish ante of late. SWCH puts bought to open have outnumbered calls by an almost 3-to-1 ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) during the past 10 weeks. This ratio is higher than 99% of all other readings from the past year, indicating a healthier-than-usual appetite for bearish bets lately.

Echoing that, the 9.42 million Switch shares sold short represent a whopping 30.6% of its available float. This represents over eight sessions of pent-up buying power, at the security's average daily trading volume, should the company snap its string of earnings misses tomorrow night. 



Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI