Call Traders Gear up for Another High Profile Earnings Report

Call traders have been flocking to the equity long term

by Emma Duncan

Published on Feb 4, 2020 at 12:26 PM
Updated on Jun 24, 2020 at 10:16 AM

Snapchat parent Snap Inc (NYSE:SNAP) is  3.5% higher today, last seen at $18.86, as the options market gears up for the company's fourth-quarter report, which is scheduled for after the close today. Below we will take a look at how SNAP has been maneuvering the charts, and what the options market expects to see after the highly anticipated report. 

The Snapchat parent has been climbing higher in 2020, just last week hitting an almost two-year high of $19.75 on Jan. 24. Now up more than 171% over the past 12 months, SNAP has enjoyed a floor of support from the ascending 200-day moving average, and continues to inch toward the aforementioned multi-year high territory.

Daily SNAP with 200MA

Digging deeper, SNAP sports a 50-day call/put volume ratio of 5.69 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ranks in the highest percentile of its annual range, meaning calls have been purchased over puts at a faster-than-usual clip over the past 10 weeks.

Echoing this is the stock's Schaeffer's open interest ratio (SOIR) of 0.20, which ranks in the 4th percentile of its annual range. In other words, short-term options players have rarely been more call-heavy during the last 12 months. 

Taking a dive into SNAP's earnings history, the stock has closed lower the day after reporting in five of the past eight quarters, including a 5.9% drop last quarter. Over the past two years, Snap stock has averaged a 17.4% swing, regardless of direction. This time around, though, the options market is estimating a higher-than-usual, 19.4% move for Wednesday's trading.


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