Options Traders Gear Up For Seismic Post-Earnings BBBY Move

BBBY has a history of volatile post-earnings moves

by Jake Scott

Published on Apr 15, 2020 at 2:49 PM
Updated on Jun 24, 2020 at 10:16 AM

The shares of Bed Bath & Beyond Inc. (NASDAQ:BBBY) are down 15.9% today, last seen trading at $4.52. This comes just ahead of the tech name's fourth-quarter earnings report, which is due out after the market close today. Below, we'll dive deeper into BBBY's earnings history, and why options traders should brace for a larger-than-expected move. 

On the charts, BBBY is down a stunning 74% year-to-date. And despite a 6% quarterly gain, the shares have seen that mini-rally run straight into their 30-day moving average, a trendline not breached on a closing basis since late January.

BBBY Chart 2 April 15

This most recent dip has left analysts on the fence. Of the 12 in coverage, nine rate it a “hold” or “strong sell,” with three giving out a “strong buy.” However, the consensus 12-month target price of $8.00 is a 49% premium to the stock’s current levels. So a rough go in the earnings confessional could prompt some overdue price-target cuts.

In the options pits, BBBY sports 10-day put/call volume ratio of 1.43 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than 83% of all other readings from the past 12 months, suggesting a much healthier appetite for long puts as of late. 

Looking back, the stock has a history of making wild post-earnings swings after quarterly reports during the past two years. This includes a 19% fall back in January, 16.6% rise in January 2019, and two drops of 20% in April and September of 2018. The security averages an 11.9% swing, regardless of direction, the day after its last eight reports, and this time around, the options pits are pricing in a seismic, 27.2% shift, regardless of direction. 


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