What Options Trader Expect From Adobe Stock After Earnings

Adobe stock has a history of negative post-earnings reactions

Deputy Editor
Jun 16, 2022 at 2:42 PM
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Software name Adobe Inc (NASDAQ:ADBE) is pulling back ahead of the release of its second-quarter earnings report, which is due out after the close today. ADBE was last seen down 2.9% at $366.01, though it's managed to pullback from earlier losses that had the equity trading at its lowest level since May 2020. Now down 35.5% in 2022, and once again staring up at the 60-day moving average, now looks like the perfect time to dig more into Adobe stock's options activity, as well as how the equity has fared after earnings in the past.

ADBE Chart June 16

The equity's options pits are seeing increased activity leading up to the event. At last check, 13,000 puts and 12,000 calls have been exchanged, which amounts to double the intraday average. The two most popular contracts today are the June 400 call and the 300 put from the same series, while the September 390 call is the top open interest position.

A more broad look shows options traders have favored puts in recent weeks. This is per ADBE's 50-day put/call volume ratio of 1.14 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 73% of readings in its 12-month range.

A quick glance at Adobe stock's last eight post-earnings moves shows the stock tends to shift lower after earnings, as six of those next-day sessions were negative. In fact, the equity saw losses following its last three earnings reports, including a 10.2% drop in December and a 9.3% dip in March. ADBE averaged a post-earnings swing of 4.7% in the past two years, regardless of direction. This is nearly half the 8.9% swing the options pits are pricing in this time around. 

 

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