Can DocuSign Stock Reach New Highs After Earnings?

Options traders aren't so sure

Deputy Editor
Sep 2, 2021 at 1:28 PM
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The shares of DocuSign, Inc. (NASDAQ:DOCU) are down 1.4% at $293.29 at last check, just a few hours ahead of the e-signature vendor's second-quarter earnings call. DocuSign stock pulled back slightly on the charts after nabbing an August 10, all-time high of $314.76, and recently found a floor at the $290 level. Now that DOCU is up 31.7% year-to-date, with support from its 60-day moving average since an early June bull gap, it's worth looking at the equity's history of post-earnings movements and why a positive report could boost it to previously uncharted territory. 

DOCU Chart September 2

Looking back at its past eight quarterly reports, five of DOCU's post-earnings sessions were positive, including a 19.8% pop after the company's last report in June. The security averaged a next-day return of 10.7%, regardless of direction. And though the options pits are pricing a slightly smaller move of 8.5% this time around, an upswing of such magnitude would put DocuSign stock at a new all-time high of $318.22.

Options traders, however, are letting their pessimism show. So far, 22,000 puts and 15,000 calls have exchanged hands -- volume that is double what's typically seen at this point. The weekly 9/3 250-strike put is the most popular, followed by the October 240 put, with positions being opened at both. 

This penchant for puts is par for the course of late, as revealed by DOCU's 10-day put/call volume ratio of 1.45 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 100% of readings in its annual range. Echoing this, the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.26 stands higher than 98% of annual readings, meaning short-term options traders have rarely been more put-biased. 

The good news for options traders is DocuSign stock's options are reasonably priced. DOCU's Schaeffer's Volatility Index (SVI) of 56% is in the 21st percentile of its annual range, implying that options players are pricing in relatively low volatility expectations.

 

 

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