HRB calls are popular today, but puts usually are preferred
The shares of H & R Block Inc (NYSE: HRB) are taking a breather today, down 0.7% at $17.75 at last check. This lackluster price action comes a few days ahead of H&R Blocks's fiscal fourth-quarter report, which
is due after the close tomorrow, June 16. Ahead of the event, we decided to dig into HRB's recent options activity.
On the charts, HRB is slowly recovering from its mid-March, ten-year-low near the $11 level. Though the equity found support at its 40-day moving average halfway through May, it is still far from last year's July 1 peak of $29.62. Last week, the stock
was turned away at the $20 level, and remains down 37% in the last 12 months.
Analysts are particularly hesitant toward HRB ahead of the event, with 5 of the 6 in coverage calling it a "hold," and only one considering it a "strong buy." Meanwhile, the current target price of $16.17 is a 9.2% discount to current levels.
The appetite for puts is high in the option pits. In the last 50 days, 1.75 puts were bought for every call at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than 96% of readings from the past year, meaning puts are being picked up at a faster-than-usual pace.
Shifting gears to today though, calls rule the roost amid limited absolute volume. At last check, over 2,200 calls have changed hands, triple the average intraday amount and volume pacing for the 97th percentile of its annual range.
A look at HRB's history of post-earnings reactions shows a mixed response. In the last eight reports, half ended their next-day sessions lower, including a 5% drop back in March. The security has averaged a post-earnings swing of 5%, regardless of direction and this time around, the options market is pricing in a much higher move of 13.7%.