2 Software Stocks Set for Earnings Releases

ZM shares are trading just below the recently formed 10-day moving average

by Josh Selway

Published on Jun 5, 2019 at 2:21 PM
Updated on Jun 24, 2020 at 10:16 AM

Looking at this week's earnings schedule, software stocks Zoom Video Communications Inc (NASDAQ:ZM) and DocuSign (NASDAQ:DOCU) are set to take the stage, both companies reporting quarterly numbers after the close tomorrow, June 6. We'll take a quick look at ZM and DOCU data to give traders a quick preview before the events.

ZM stock was last seen trading at $77.50. The stock debuted around $65 back in April, after pricing its initial public offering (IPO) of $36 per share, and traded as high as $91.46 on May 20. The shares are now just below the recently formed 10-day moving average. This will be the company's first earnings release as a publicly traded entity, and the options market is pricing in a 13.4% swing for the shares for Friday's trading. The equity's largest one-day swing to-date is a 9.1% gain on May 15.

Should the earnings release impress, there's room for bullish adjustments from covering analysts. Of the 13 brokerage firms covering the shares, eight of them have "hold" or "strong sell" recommendations. Near-term options traders are currently put-skewed, too, based on the Schaeffer's put/call open interest ratio (SOIR) of 1.26.

For DOCU, this will be its fifth time in the earnings spotlight since going public last April, and the stock will be hoping to break a three-quarter streak of negative earnings reactions, dropping 4% the day after the most recent release in March. The options market is expecting more volatility this time, pricing in a 9.7% move.

On the charts, the security last checked in at $52.63, bouncing from support from the newly formed 200-day moving average in recent weeks, while the $50-$52 area acted as a floor last summer, as well. Still, bears have picked up the pace in the options pits in recent weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), based on the 10-day put/call volume ratio of 0.96. While this still shows long calls with an edge on an absolute basis, the reading's annual percentile rank of 90% reveals put buying has been more popular than normal.


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