Vaccine Staple Gears Up for Earnings Report

Options volume is pacing at triple the intraday average

Assistant Editor
Jul 28, 2021 at 1:03 PM
facebook twitter linkedin


The shares of AstraZeneca plc (NYSE:AZN) are down 0.3%, last seen trading at $57.27 as the vaccine staple gets ready to step into the earnings confessional. AstraZeneca is slated to report second-quarter financial results before the open tomorrow, July 27. Below, we'll take a look at the stock's technical setup, how options players are approaching the event, and the equity's post-earnings performance over the last two years. 

On the charts, AZN is cooling off from a July, annual peak of $60.93, bringing the security within 2% of its year-over-year breakeven. It also marks two rejections from the $61 level this month. In addition, AstraZeneca stock is pacing for its 10th consecutive close below the 40-day moving average -- a trendline that guided the shares higher beginning in April. The equity, however, remains up 14.6% year-to-date.

AZN Chart July 28

Options traders are piling on the security ahead of earnings. So far today, 15,000 calls and 11,000 puts have crossed the tape, which is triple the intraday average. The September 60 call is the most popular, and new positions are being opened at the weekly 7/30 56-strike put. This implies that these traders see upside for AZN stock heading into the latter part of the year, but some short-term downside with earnings on the horizon.

However, a look at AstraZeneca stock's post-earnings performance actually points to the contrary. In the last eight reports, AZN stock has logged a positive next-day move six times, including two consecutive 5.7% upswings in July and October 2020. The security has averaged a post-earnings move of 2.6%, regardless of direction, and the options market is pricing in a slightly larger 5.1% move for the stock this time around.

With all of that in mind, options look like the right play, as AZN premium can be had for a bargain at the moment. The stock's Schaeffer's Volatility Index (SVI) of 23% sits in the low 24th percentile of its annual range.

Grab your FREE Eternal Contrarian report!


 




 
Special Offers from Schaeffer's Trading Partners