Industrial Supplier Stock Rises Ahead of Earnings

FAST calls are a popular pick ahead of earnings tomorrow

Jake Scott
Jul 13, 2020 at 12:53 PM
facebook twitter linkedin


The shares of Fastenal Company (NASDAQ:FAST) are up 1.9% to trade at $43.84 at last check, ahead of the company's fiscal second-quarter report, which is due out before the open tomorrow. Below, we will take a look at how the equity has performed on the charts as of late, and explore some of the options activity surrounding FAST ahead of the event. 

The equity has experienced its fair share of ups and downs over the last few months, dipping to an annual low of $26.72 during the broader market's mid-March pullback, only to rapidly recover to an all-time high of $44.79 on July 6. Meanwhile, Fastneal stock has been enjoying support from the 30-day moving average since early April. Longer term, FAST sports a 41.4% year-over-year lead.

FAST w30MA

Still, analysts are approaching Fastenal stock with a fair amount of skepticism. Of the 12 in coverage, nine sport a tepid "hold." Conversely, the remaining three call it a "strong buy."

In the options pits, there is still a strong preference for calls at the moment. This is per FAST's 10-day call/put volume ratio of 3.91 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio ranks in the elevated 89th percentile of its annual range, suggesting a healthier-than-usual appetite for short calls of late.

Today, however, there's a lot of disagreement going on. Calls are trading at two times the average intraday amount, while puts are trading five times more than usual. Both puts and calls are trading in the 94th percentile of their annual range. The most popular option at the moment is the weekly 8/21 42.50-strike put, where new positions are being opened, followed by the July 45-strike call.

A look at the equity's history of post-earnings reactions during the past two years shows a slightly more positive response. During its last eight reports, five of these next-day sessions were higher, including a 17.2% rise in October 2019. FAST averaged a post-earnings swing of 7.1% the last eight quarters, regardless of direction. This time around, the options market is pricing in a slightly higher move of 9.2%. 


A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earnings guide for Q3 before it's too late!


  
 

Partnercenter