Blue-Chip TRV Tallies Annual High Ahead of Earnings

Analysts are particularly bearish ahead of the event

Assistant Editor
Jan 19, 2021 at 3:03 PM
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Blue-chip insurance stock Travelers Companies Inc (NYSE:TRV) is up 0.5% at $143.83 at last check, after earlier hitting $144.29 to surpass last session's annual high of $144.12. On its way higher since an early-November bull gap, TRV's latest pullback was caught by the 50-day moving average, with shares breaking through resistance at the $140 region last week. What's more, today's positive price action comes just ahead of the company's fiscal fourth-quarter earnings report, due before the open on Thursday, Jan. 21. 

Leading up to the event, the options market is pricing in a post-earnings move of 3.3%, which is just barely lower than the security's average post-earnings swing of 3.4% from the last eight reports, regardless of direction. A look back at these reports shows that TRV closed two of these next-day sessions higher, while one of those days was flat. However, it's worth noting that last quarter the stock experienced a 5.6% pop. 

TRV Jan 19

Despite the recent rally, most analysts are hesitant toward the equity. Out of the 17 analysts in coverage, 13 carry a "hold" or worse rating, leaving plenty of room for a round of upgrades to act as a tailwind. 

Meanwhile, the options pits lean overwhelmingly bullish. This is per TRV's 10-day call/put volume ratio of 6.61 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than 97% of all other readings from the past year, indicating calls are being picked up at a faster-than-usual clip. 

Now could be a good time to weigh in on these TRV options. The stock's Schaeffer's Volatility Index (SVI) of 27% stands higher than just 10% of all other readings in its annual range, implying that options players are pricing in relatively low volatility expectations at the moment. 

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