Home Improvement Giant Readies for Earnings

The home improvement stock has a mixed post-earnings history

Deputy Editor
Aug 10, 2023 at 12:54 PM
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Home improvement retailer Home Depot Inc (NYSE:HD) is up 0.9% at $331.07 in afternoon trading, ahead of the blue chip's second-quarter earnings, due out before the market open on Tuesday, Aug. 15. Here's a closer look at how HD has been performing in the lead up to the event, and what the options market is pricing in for the equity's post-earnings session.

Since dipping a May 16, roughly six-month low of $277.09, HD managed a healthy rebound on the charts. The equity was guided higher by its 10-day moving average since late May, dipping below the trendline over the last four sessions. However, today's positive price action has Home Depot stock trading back above the trendline and 4.5% higher for 2023.

HD Chart August 102023

Diving into HD's earnings history, the stock has closed higher the day after four of the company's past eight quarterly reports, though it fell 7.1% and 2.2% after its last two respective earnings calls. Overall, the shares averaged a 4.4% swing the day after reporting, regardless of direction. This time around, Home Depot options traders are pricing in a similar 4.5% swing for Wednesday's trading.

Looking at options, data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows the equity sports a 50-day call/put volume ratio of 1.45 that ranks in the 92nd annual percentile. In other words, calls have been purchased over puts at a faster-than-usual clip of late.

 

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