Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Apr 14, 2016 at 1:56 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Intraday Option Activity
A day after GoPro Inc (NASDAQ:GPRO) ripped higher on remarks from Raymond James, the wearable camera stock is picking up where it left off. This time around, GPRO is up 1.7% at $14.14, following yesterday afternoon's report that veteran Apple Inc. (NASDAQ:AAPL) designer Daniel Coster has been named the company's vice president of design. Meanwhile, interest in GPRO is growing in the options pits.

Diving right in, GPRO call options are changing hands at triple the expected intraday rate, and outweigh put options 29,000 contracts to 16,000. It looks like traders are buying to open the in-the-money April 13.50 call, which is the stock's most active strike -- banking on the shares extending their momentum through tomorrow's close, when front-month options expire.

The optimism observed among options traders isn't anything new for GPRO. During the past 10 sessions across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open 2.39 calls for every put -- a reading that ranks in the top third of its annual range. Likewise, GPRO's Schaeffer's put/call open interest ratio (SOIR) of 0.73 is lower than 80% of readings from the last 52 weeks, indicating short-term traders are far more call-skewed than usual.

Not every call buyer is necessarily a bull, though. Over the last two reporting periods, short interest on GPRO spiked 14.6%, and now accounts for nearly one-third of the stock's float. Some of these short sellers may have purchased calls -- especially at out-of-the-money strikes -- to serve as a hedge to the upside.

For "vanilla" bulls, call buying has probably paid off in recent weeks. GoPro Inc (NASDAQ:GPRO) has been an absolute beast since hitting an all-time low of $9.01 in early February, surging 57% -- ushered higher by a key trendline. What's more, on a relative-strength basis, the stock has outperformed the broader S&P 500 Index (SPX) by 18.8 percentage points over the previous 60 sessions.

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Published on Apr 14, 2016 at 2:21 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Analyst Update
Cowen and Company offered up a "cautious view" of the agriculture industry, saying its review of data suggests "pricing and volume issues for phosphate and potash products over the next two years." The brokerage firm also drilled down in on a number of individual fertilizer stocks, including CF Industries Holdings, Inc. (NYSE:CF), Mosaic Co (NYSE:MOS), and Intrepid Potash, Inc. (NYSE:IPI). Here's a quick roundup of Cowen's analyst notes on CF, MOS, and IPI.

  • CF, for instance, was downgraded to "underperform" from "market perform" at the brokerage firm, which also lowered its price target to $25. As such, the shares are off 2.4% at $30.49 -- widening their year-to-date deficit to 47%. Amid this downtrend, short sellers have been piling on, with short interest surging 17.3% in the most recent reporting period. However, short interest still accounts for less than 9% of CF Industries Holdings, Inc.'s float, meaning the bearish bandwagon is far from full. The stock could encounter stiffer headwinds, should short sellers continue to increase their exposure.

  • Cowen also lowered its rating on MOS to "underperform" from "market perform," while reducing its price target by $9 to $23. While the shares are off 4.8% at $25.25, though, they may have found a foothold atop their 10-day moving average -- a trendline that ushered MOS lower in late 2015. Longer term, the stock has added almost 15% since hitting a seven-year low of $22.02 in early February. Should Mosaic Co resume its recent rebound, the stock could benefit from an unwinding of skepticism among short-term options traders. In fact, MOS' Schaeffer's put/call open interest ratio (SOIR) of 1.01 sits just 8 percentage points from a 52-week peak.

  • Finally, IPI was downgraded to "outperform" from "market perform," as well, sending the stock down 8.6% to $1.01. IPI has been a long-term laggard, though, surrendering 92% year-over-year, and more recently, struggling under the weight of its 20-day moving average. Short sellers have been betting on more downside, too. Short interest jumped 7.4% in the latest reporting period to 4.4 million shares -- or 7.9% of Intrepid Potash, Inc.'s available float.
For other stocks in analysts' crosshairs, read Analyst Upgrades: Chipotle Mexican Grill, Inc., 3D Systems Corporation, and Kate Spade & Co and Analyst Downgrades: Potash Corporation of Saskatchewan, Symantec Corporation, and Western Digital Corp.
Published on Apr 14, 2016 at 2:38 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Expectational Analysis
FireEye Inc (NASDAQ:FEYE) has been consolidating around $18 for nearly two months, and was last seen hovering near breakeven at $18.30. However, the cybersecurity stock's 40-day moving average has recently caught up to the shares, signaling a potential bullish move may be on the horizon -- and perhaps explaining why short-term options traders have been so call-focused toward FEYE.

The last time FEYE breached the 40-day trendline was in mid-February. Looking out 21 trading days, the cybersecurity stock advanced nearly 2%, which could be a good omen going forward. Potentially reinforcing this technical support, heavy levels of put open interest are found at the underfoot April 17 and 18 strikes, as well as the weekly 4/22 18 strike.

As alluded to, short-term options traders have preferred FEYE calls over puts. Specifically, the stock's Schaeffer's put/call open interest ratio (SOIR) is 0.36, with calls nearly tripling puts among options with a shelf-life of three months or less. On top of that, this SOIR ranks just 19 percentage points from an annual low, signaling a historically elevated call bias.

That said, not everyone's sold on FEYE. Over half of the analysts tracking the stock rate it a lukewarm "hold." What's more, 11% of its float is sold short, which represents nearly a week's worth of pent-up buying power, at the cybersecurity stock's typical daily trading levels. From a contrarian perspective, if FireEye Inc (NASDAQ:FEYE) bounces from its 40-day moving average, a capitulation among the bears could spark an outsized rally.
Published on Apr 14, 2016 at 2:48 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Intraday Option Activity
  • Stock Market News
Beer giants Molson Coors Brewing Company (NYSE:TAP) and Anheuser Busch Inbev SA (ADR) (NYSE:BUD) both shot higher at midday, on news the latter company will create a $69 million fund to aid the South African beer industry and help bolster its takeover bid for SABMiller. Not only are TAP and BUD both trading higher on these developments, but the stocks' options pits are seeing accelerated activity. 

TAP call options are trading at four times the average intraday pace, and the most popular option is the May 97.50 strike. Buy-to-open activity has been detected here, meaning traders are speculating that TAP will eclipse $97.50 before the close on Friday, May 20, when the soon-to-be front-month options expire. For reference, TAP's all-time high stands at $97.25, reached earlier this month. 

Looking back, though, TAP put buying has been through the roof lately at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, the stock's 10-day put/call volume ratio comes in at a sky-high 31.00 -- an annual peak. However, the most popular option during this time frame, judging by increases to open interest, was the May 100 call -- which has added nearly 8,300 positions in the past two weeks.

At last check, Molson Coors Brewing Company (NYSE:TAP) was up 2.9% at $95.60. Since pulling back from its record highs earlier this month, TAP has been enjoying support from its rising 30-day moving average, a trendline that guided the stock higher back in October and November. Overall, the beer stock is up 24% year-over-year. 

In BUD's options pits, puts are trading at twice the expected intraday pace. The most popular is the May 115 strike, and it looks like this option may be seeing sell-to-open activity. If so, these put writers are hoping for the $115 level to act as a short-term floor for the stock through May options expiration. 

On the other side of the aisle, traders are initiating long calls at the April 130 strike. This means they're betting on a surge past $130 -- roughly corresponding to the stock's all-time high -- from BUD by the end of this week, when front-month options expire. 

Call buying is common among BUD speculators. In fact, the stock's 10-day ISE/CBOE/PHLX call/put volume ratio stands at an annual high of 112.14. Digging deeper, the January 2018 170-strike call has added more than 20,000 new positions in the last 10 trading days -- the most of any BUD option -- while short-term speculators have targeted the May 135 call, where over 13,500 contracts have been tacked on.

As alluded to, Anheuser Busch Inbev SA's (ADR) (NYSE:BUD) all-time high of $130.08 was reached back in November. It's been a roller-coaster ride for the shares since then, but with BUD's 2.6% pop today at $125.44, the stock has edged its way back into positive year-to-date territory. 

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Published on Apr 14, 2016 at 2:58 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Stocks On the Move
  • Stock Market News
It's a pretty mild day for the broader stock market, but biotech stock Chiasma Inc (NASDAQ:CHMA) is seeing some action. Specifically, the stock has plunged 13.8% to $9.40 -- after earlier being off by more than 17% -- on speculation the Food and Drug Administration (FDA) is preparing to reject Chiasma's oral treatment for acromegaly, a rare disease affecting the pituitary gland.

However, this negative price action is nothing new for Wall Street freshman CHMA, which is down 69% from its mid-August all-time high of $30.52. What's more, the stock's recent rally attempt was quickly halted by its 80-day moving average. CHMA has only closed north of this trendline twice since it was formed in mid-November.

Daily chart of CHMA

Short sellers, meanwhile, have been bracing for more downside. Short interest jumped 8.3% in the last two reporting periods, and now accounts for a lofty 12.5% of CHMA's available float. It would take almost a week to cover these shorted shares, at the stock's average daily pace of trading.

Analysts, however, have a taken a glass-half-full approach to CHMA. In fact, all four analysts covering the shares maintain a "strong buy" rating on the equity. Should Chiasma Inc (NASDAQ:CHMA) continue to struggle both on and off the charts, a round of downgrades could create more headwinds for the shares.

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Published on Apr 14, 2016 at 9:22 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Analyst Upgrades
Analysts are weighing in on fast-casual restaurant chain Chipotle Mexican Grill, Inc. (NYSE:CMG), 3-D printing stock 3D Systems Corporation (NYSE:DDD), and upscale accessories designer Kate Spade & Co (NYSE:KATE). Here's a quick roundup of today's bullish brokerage notes on CMG, DDD, and KATE.
 
  • J. P. Morgan Securities upgraded its opinion of CMG to "overweight" from "neutral," sending the stock 2.7% higher pre-market. The shares could certainly use a boost, considering they've lost over 41% since hitting an all-time high of $758.61 in early August to trade at $444.66. That hasn't stopped options traders from betting bullishly on Chipotle Mexican Grill, Inc. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open 1.11 calls for each put during the past 10 days -- with the corresponding call/put volume ratio outstripping 86% of all others from the last year.

  • DDD is pointed 7.4% higher in electronic trading, after BofA-Merrill Lynch bumped its rating up to a "buy." The bullish note reflects the technical muscle the stock has been flexing since its Jan. 20 five-year low of $6 -- rocketing 177% to register at $16.60. If other analysts start to follow suit, 3D Systems Corporation could extend its run to the upside. After all, just one of 15 brokerage firms tracking the stock rate it a "buy."

  • KATE was added to Citigroup's "Focus List," with the brokerage firm citing the stock's growth prospects and fair price. As a result, the stock has added 1% ahead of the open. Speaking more broadly, Kate Spade & Co has been on a mission after its double-bottom in the $15-$16 area in January and February, closing last night at $24.87. As the shares have charged higher, short sellers have hit the exits. During the latest reporting period, short interest on KATE fell 16.8% -- though 11.4 million shares remain shorted, representing a week's worth of pent-up buying power, at the stock's typical trading volumes.
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Published on Apr 14, 2016 at 9:29 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Buzz Stocks
U.S. stocks are set to start the day higher again, following relatively dovish comments from one Fed official. Among equities in focus today are financial giant Bank of America Corp (NYSE:BAC), data storage specialist Seagate Technology PLC (NASDAQ:STX), and solar energy stock Sunedison Inc (NYSE:SUNE).

  • BAC is set to slip 0.9% at the open, after the firm said first-quarter earnings slid 18% year-over-year -- although the results arrived above the consensus estimate. Closing at $13.79 on Wednesday, the stock is off 18% so far in 2016, and has been facing some resistance in the $14 area for most of the year. Some recent call buyers were hoping for a breakout above this level, but if these bulls hit the exit on today's projected earning reaction, the shares could be in for even more losses.

  • STX is down 13.3% in electronic trading after cutting its guidance for the most recent quarter, citing weak demand, particularly from China, and receiving no fewer than six price-target cuts -- including one from Goldman Sachs to $26 from $30. The shares popped on Monday after a positive write-up from Barron's, but option traders weren't impressed. However, the stock once again failed to overtake its descending 140-day moving average, and closed at $33.93 on Wednesday. Outside of the options pits, short sellers have piled on Seagate Technology PLC, with short interest up 12% during the most recent two-week reporting period. These bearish bets now account for 12.6% of the equity's available float, and at STX's average pace of trading, it would take nearly eight sessions to buy back all of these shorted shares.

  • SUNE is up 70.6% in pre-market trading from its Wednesday close of $0.37. The company's independent audit committee reportedly found no evidence of accounting fraud, but "identified issues with the company's overly optimistic culture and its tone at the top." Sunedison Inc also said it has dismissed one employee over misconduct related to negotiations in the termination of its acquisition of Vivint Solar Inc (NYSE:VSLR). Some recent call buyers will likely be cheering today if SUNE can keep its momentum going through tomorrow's close, when the front-month April series expires.
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Published on Apr 14, 2016 at 9:47 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Analyst Downgrades
Analysts are weighing in on fertilizer firm Potash Corporation of Saskatchewan (USA) (NYSE:POT), software stock Symantec Corporation (NASDAQ:SYMC), and data storage dynamo Western Digital Corp (NASDAQ:WDC). Here's a quick roundup of today's bearish brokerage notes on POT, SYMC, and WDC.

  • POT saw its rating cut to "underperform" from "market perform" at Cowen, which also dropped its price target to $14. This negativity is par for the course, as 13 of 18 analysts have handed out "hold" or worse recommendations on the stock. Who can really blame them? Potash Corporation of Saskatchewan has been a dismal long-term performer, losing roughly half of its value year-over-year to trade at $16.28, including today's 2.3% dip.
  • Evercore ISI initiated coverage on SYMC with a "sell" rating and $14 price target. Likewise, Barclays slashed its price target to $18 from $22. The collective skepticism has Symantec Corporation down 1.9% this morning at $17.82, but it's still advanced 21% since hitting an annual low of $14.74 in late January. Options traders aren't buying the hype, though. SYMC's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 6.28 ranks in the bearishly skewed 92nd percentile of its annual range.
  • WDC saw its price target lowered to $60 from $70 at Craig-Hallum, due to an ominous outlook from this sector peer. The bearish note has the stock 7.7% lower out of the gate at $41.34. This is more of the same for Western Digital Corp, which is down 31% on a year-to-date basis. Amid these struggles, short sellers have been piling on. During the last two reporting periods, short interest on WDC spiked close to 80%, and now 13.4% of its float is sold short -- which would take about one week to cover, at the stock's typical trading levels.
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Published on Apr 14, 2016 at 10:37 AM
Updated on Mar 19, 2021 at 7:15 AM
  • By the Numbers

Delta Air Lines, Inc. (NYSE:DAL) is up 1.3% this morning at $48.68, after the company announced better-than-expected earnings results -- though passenger revenue declined. This should be good news for the airline stock's options traders, as bulls have had DAL in their sights in recent weeks. 

For example, DAL's 50-day call/put volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands at 4.23, meaning more than four calls have been bought to open for every put during the past 10 weeks. What's more, the stock's Schaeffer's put/call open interest ratio (SOIR) is 0.40, indicating call open interest more than doubles put open interest among short-term options. In today's trading, calls are running at quadruple the usual intraday clip, and outstrip puts by a nearly 3-to-1 margin.

Among short sellers, pessimism toward the shares has been fading. Short interest on DAL fell by 13.4% during the last two reporting periods. Now, less than 3% of the stock's float is sold short. 

Meanwhile, analysts have high expectations. In fact, 88% of covering brokerage firms recommend buying DAL, and none consider the stock a "sell." Plus, the shares' average 12-month price target comes in at $63.14 -- all-time-high territory. 

A closer look at the charts shows that DAL has been mostly range-bound for more than a year. Specifically, the stock has spent a large portion of its time bouncing between $40 and $50, with the shares struggling to overcome the half-century mark -- which now may be displaying options-related resistance. A brief foray north of this range allowed DAL to notch a record high of $52.77 in mid-December, before it quickly pulled back.

More recently, Delta Air Lines, Inc. (NYSE:DAL) bounced from its 320-day moving average. Looking at the previous five times this has happened over the last three years, the stock has averaged a 21-day return of 10.7%. So, while the stock doesn't have much appeal from a contrarian standpoint -- since Wall Street's already quite bullish -- the shares' technical set-up suggests a potential push for record highs could be in store for DAL, if it can rally past the $50 level. 

Delta Air Lines Daily Chart April 14

Published on Apr 14, 2016 at 11:03 AM
Updated on Mar 19, 2021 at 7:15 AM
  • Stock Market News
  • Stocks On the Move
  • Intraday Option Activity
Sunedison Inc (NYSE:SUNE) is soaring today, after the company was cleared of accounting fraud. While this bull gap should be taken with a grain of salt considering the stock is trading at just $0.68 -- even with an 84% pop -- it is having a ripple effect across the alternative energy sector. Among solar stocks that are getting a boost from Sunedison are the firm's former takeover target Vivint Solar Inc (NYSE:VSLR), as well as its yieldco's TerraForm Power Inc (NASDAQ:TERP) and TerraForm Global Inc (NASDAQ:GLBL).

VSLR, for instance, was up as much as 10.7% in early trading before turning slightly lower, last seen at $2.90. Longer term, the shares have surrendered roughly three-quarters of their value year-over-year. What's more, the stock is fresh off an April 5 record low of $2.32.

On the sentiment front, short sellers have been anticipating lower lows for Vivint Solar Inc. Short interest surged 11.6% in the two most recent reporting periods, and now accounts for more than 29% of the security's available float.

TERP, meanwhile, has tacked on 1.6% to trade at $10.18. The stock has been falling in step with SUNE for some time now, down nearly 76% year-over-year. Additionally, today's pop has the equity quickly approaching its 120-day moving average -- a trendline TERP has not traded north of since last July.

Nevertheless, calls are crossing at five times the average intraday rate in TERP's lightly traded options pits, with 1,934 call options on the tape versus 750 put options. More broadly speaking, short-term speculators have shown a preference for calls over puts, per TerraForm Power Inc's Schaeffer's put/call open interest ratio (SOIR) of 1.56 -- in the 73rd annual percentile.

Lastly, GLBL has popped 1.5% to trade at $2.68. The stock could certainly use a boost, considering it's shed more than half its value year-to-date. More recently, the stock has filled a late-March bear gap -- which Sunedison had an unfortunate hand in.

Analysts have been less-than-thrilled with TerraForm Global Inc's performance. In fact, all four brokerages covering the shares maintain a lackluster "hold" rating.
Published on Apr 13, 2016 at 2:01 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Intraday Option Activity
It's been a tough month for Facebook Inc (NASDAQ:FB), with shares of the tech stock down about 6.4% since March 31. Today, the shares jumped to an intraday peak of $112.65 out of the gate -- after the company said it is throwing its hat in the chatbot ring via its Messenger app -- but have since retreated as volume has increased. At last check, FB stock was off 3.4% to trade at $106.85. Still, calls are trading at twice the average intraday volume.

Drilling down, the most popular FB option is the April 110 call. Data confirms traders are initiating long positions here, meaning they're betting on FB to rebound above $110 by week's end, when front-month options expire.

Further down the line, FB's next most popular options are the April 111, 112, and 113 calls, and it looks like traders are buying to open positions here, too. In other words, a number of speculative players have high hopes for the tech stock through the end of this week.

Bulls have been active on FB for some time, though. Specifically, 2.14 FB call options have been bought to open for every put option during the last 10 days, according to data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). 

Aside from the options crowd, FB is also a favorite among analysts. In fact, there's just one analyst out of the 28 that cover the stock that doesn't recommend buying it. Moreover, FB's average 12-month price target of $134.64 stands in all-time-high territory. 

As mentioned, Facebook Inc (NASDAQ:FB) has struggled from a technical standpoint in recent weeks. But, of course, the shares have outperformed on a long-term basis, almost doubling in value over the past two years. Now, FB's 80-day moving average is coming into play again, a trendline that sent the shares soaring back in March.

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Published on Apr 13, 2016 at 2:23 PM
Updated on Mar 19, 2021 at 7:15 AM
  • Stocks On the Move
  • Intraday Option Activity
  • Earnings Preview
Earnings season got off to a sluggish start, but is picking up steam thanks to better-than-expected results from JPMorgan Chase & Co. (NYSE:JPM). Financial stocks will again be in focus tomorrow, as Bank of America Corp (NYSE:BAC) and Wells Fargo & Co (NYSE:WFC) are set to report earnings before the open. Below, we'll take a closer look at how options traders have been positioning themselves ahead of BAC and WFC earnings.

  • BAC is up 4.1% at $13.82, as a sector-wide rally offsets reported deficiencies in the firm's "living will." From a longer-term perspective, today's gains represent a dramatic change of pace for the bank stock. Year-to-date, shares of the financial firm have lost nearly 18%.

    Ahead of tomorrow morning's earnings report, BAC options are trading at twice the normal intraday rate, with calls tripling puts. The most active strike is the near-the-money April 14 call, where at least some buy-to-open activity is detected, per International Securities Exchange (ISE) data -- hinting at bullish expectations. Meanwhile, the options market is pricing in a 5.1% single-day post-earnings swing for Bank of America Corp, roughly doubling its usual move. Looking back eight quarters, the stock has finished the post-earnings session lower 75% of the time. If this happens again, a capitulation among today's option bulls could exacerbate BAC's losses.

  • While WFC's "living will" wasn't up to snuff, either, the bank stock is currently 2.9% higher at $49.14. However, the shares are approaching their descending 80-day moving average, which rejected a breakout attempt late last month. Today, put options are running at quadruple the usual intraday clip, and outstripping calls. In fact, the three most active WFC options are puts, including the April 48, January 2017 50, and January 2018 50 strikes. In recent weeks, however, traders have bought to open 1.65 calls for every put across the ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX).

    In terms of Wells Fargo & Co's history in the earnings confessional, the stock has given up ground in the ensuing session after six of the last eight reports. On average, the shares post a one-day move of 1.4% in either direction. This time around, though, the options market is pricing in a 3.7% single-session swing for WFC.

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