Bears Flock to Cal-Maine Foods Before Earnings

Short interest surged in the last reporting period

Managing Editor
Jul 19, 2019 at 1:09 PM
facebook X logo linkedin

Egg producer Cal-Maine Foods Inc (NASDAQ:CALM) is up 0.6% at $39.32 this afternoon, with the long-term underperformer set to snap its two-day losing streak. History suggests the stock could be in store for more downside after the company's fiscal fourth-quarter earnings, slated for release before the market opens this Monday, July 22. Below, we will take a look at how CALM has been faring on the charts, as well as what the options market is pricing in for the stock's post-earnings move.

As alluded to above, CALM has struggled to gain ground over the past year. Despite multiple breakout attempts, the 160-day moving average has been a stiff ceiling for the shares, and has helped usher the equity to a roughly 14% year-over-year deficit. 

Daily CALM with 160MA

Looking at the food concern's earnings history, the stock has closed lower the day after earnings in six of the past eight quarters -- including a 3% decline in April and a 6.8% drop in October. Over the past two years, the shares have swung an average of 3.8% the day after earnings, regardless of direction. This time around, the options market is pricing in a larger-than-usual 6.3% swing for Monday's trading. 

Near-term options traders are unusually put-skewed on Cal-Maine stock, according to its Schaeffer's put/call open interest ratio (SOIR) of 3.57, which ranks in the 93rd annual percentile. The August 40 and 42.50 puts are home to heavy open interest, and data from Trade-Alert points to buy-to-open activity here.

The skepticism toward Cal-Maine Foods has grown outside of the options pits, too. Short interest grew 7.1% during the most recent reporting period, and now accounts for 19.4% of the stock's total available float. At the security's average pace of trading, it would take shorts a full week to buy back their bearish bets.


Unlock Weekend Profits with Chris Prybal's Favorite Strategy Up +487.5% in 2024

With the markets going left, right, and sideways, you need to have a plan now more than ever. 

Expert Trader Chris Prybal is no stranger to volatility, and has mastered finding big stock rallies while other traders aren't looking over the weekend. Rallies that produced gains like +207% on RTX calls, +236% on MARA calls, and +238% on NET calls.

A few simple moves on Sunday at 7pm could be the “Secret Sauce” your portfolio needs to not just stay afloat, but make unprecedented gains in this turbulent market.

Don’t sit on the sidelines, beat the market with Chris Prybal's strategy. Join him now!




Rainmaker Ads CGI