MKC Heats Up Ahead of Q3 Earnings Report

Calls are popular ahead of the event

Deputy Editor
Sep 28, 2020 at 12:04 PM
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The shares of McCormick & Company, Incorporated (NYSE:MKC) are up 1.8% to trade at $195.21 at last check, just one day ahead of the company's third-quarter earnings report, which is due out before the open on Tuesday, Sept. 29. 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 McCormick stock ahead of the event. 

MKC has recovered in spectacular fashion since bottoming out to a two-year low of $112.23 during the mid-March pullback, notching all-time high close of $209.78 on Sep. 3. The equity has taken a breather since this high, pulling back below the  $200 mark, which provided a floor in August and early September. MKC's 100-day moving average captured most of this pullback, however, and longer term, McCormick stock sports a 25.3% year-over-year lead. 

MKC Chart September 28

In the options pits, bulls rule the roost, as is evidenced by McCormick stock's 10-day call/put volume ratio of 2.82 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). That ratio stands higher than 100% of readings from the past year, implying a ravenous appetite for long calls of late.

Today's options pits are flashing similar activity. So far, 1,563 calls have exchanged hands -- 13 times the intraday average, with volume pacing in the 99th percentile of its annual range -- compared to just 426 puts. Most popular is the October 210 call, followed by the 200 call from the same series.

A look at McCormick stock's history of post-earnings reactions during the past two years shows a mixed response. During this time period, its next-day sessions have been evenly split, and include a 10.5% next-day drop in January 2019, and a 6.8% pop following its third-quarter earnings report this time last year. Overall, the security averaged a post-earnings swing of 4%, regardless of direction, and this time around, the options market is pricing in a slightly higher move of 4.9%. 


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