Earnings Season Highlights

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A collection of noteworthy post-earnings reactions
Published on Nov 5, 2014 at 2:26 PM
Updated on Mar 19, 2021 at 7:15 AM
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The 20 stocks listed in the table below are the names that have attracted the highest weekly options volume during the past 10 trading days. Those highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest today is electric car concern Tesla Motors Inc (NASDAQ:TSLA), where traders are gambling on a post-earnings pullback.

Most Active Weekly Options Table

Tesla Motors Inc will take its turn in the earnings confessional after tonight's close, and ahead of the scheduled event, the stock is down 3.1% at $231.45 -- despite the company's Model S snagging Europe's top safety rating. Longer term, though, the shares have rallied more than 54% this year, thanks to a lift from their 140-day moving average. What's more, this trendline is helping to contain today's pullback.

Option traders are paying no mind to this longer-term uptrend, with puts trading at a 59% mark-up to the average intraday pace -- and a number of speculators are rolling the dice on a breach of this steady layer of support in the wake of tonight's quarterly earnings results. Specifically, TSLA's weekly 11/7 210-strike put has received notable attention today, with 3,138 contracts on the tape at last check. The majority have crossed at the ask price, implied volatility has shot 38.1 percentage points higher, and volume outstrips open interest -- all signs of buy-to-open activity.

By purchasing these out-of-the-money puts for a volume-weighted average price (VWAP) of $3.09, traders expect TSLA to breach $206.91 (strike less VWAP) by this Friday's close, when the weekly series expires. Considering TSLA hasn't traded south of $210 since mid-June, delta on the put is docked at negative 0.20, indicating a 1-in-5 chance the option will be in the money at week's end.

Widening the sentiment scope reveals today's put activity just echoes the withstanding trend witnessed in Tesla Motors Inc's (NASDAQ:TSLA) options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, the stock's 10-day put/call volume ratio of 1.02 ranks in the bearishly skewed 93rd percentile of its annual range. As my colleague Alex Eppstein noted yesterday, though, a portion of this activity could be protective in nature.

Published on Nov 5, 2014 at 12:47 PM
Updated on Mar 19, 2021 at 7:15 AM
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Unlike sector peer SolarCity Corp (NASDAQ:SCTY), First Solar, Inc. (NASDAQ:FSLR) is slightly higher this afternoon at $57.01, ahead of tomorrow night's turn in the earnings confessional. However, at least one group of options traders is wagering on post-event downside.

Taking a quick step back, puts are changing hands at more than double the expected intraday rate, and at about four times the pace of calls. Most active is FSLR's November 54 put, where 3,213 contracts are on the tape. Almost all of them have traded at the ask price, implied volatility has edged 3.8 percentage points higher, and volume outstrips open interest -- collectively hinting at newly bought bearish bets.

By scooping up the puts, today's speculators expect FSLR to tumble below $54 by the close on Friday, Nov. 21, when front-month options expire. However, delta on the contract sits at negative 0.33, representing a slim 1-in-3 chance the option will be in the money at expiration.

As alluded to earlier, First Solar Inc. (NASDAQ:FSLR) will step up to the earnings plate Thursday night, and analysts are calling for a per-share profit of 64 cents. Looking back, things have tended to get volatile in the aftermath of the company's last eight quarterly events. The stock's average single-session, post-earnings move is 10.1%, which includes a 17.6% gain last November.

Published on Nov 5, 2014 at 12:36 PM
Updated on Mar 19, 2021 at 7:15 AM
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Three stocks seeing notable options activity today are nutritional supplements specialist Herbalife Ltd. (NYSE:HLF), online travel issue TripAdvisor Inc (NASDAQ:TRIP), and renewable energy firm SolarCity Corp (NASDAQ:SCTY). Here's a quick look at how speculators have been placing their bets on HLF, TRIP, and SCTY.

  • Herbalife Ltd. (NYSE:HLF) is continuing its post-earnings swoon today, down 5.4% at $41.85. Against this backdrop, the stock has been placed on the short-sale restricted (SSR) list, and put players are flocking to the equity's options pits to look for alternate ways to bet bearishly on HLF. In fact, puts are trading at four times the average intraday rate, and are outpacing calls by a nearly 4-to-1 margin. Buy-to-open activity has been detected at HLF's November 37.50 put, meaning speculators expect the stock to breach $37.50 by the close on Friday, Nov. 21, when front-month options expire. This would be a new annual low for the shares, and as such, delta on the put is docked at negative 0.25.

  • TripAdvisor Inc (NASDAQ:TRIP) tagged a new annual low of $71.05 right out of the gate, but was last seen down 13.8% at $72.22. Pressuring the shares lower is a third-quarter earnings miss and subsequent round of price-target cuts, including one from Susquehanna, which slashed its outlook by $23 to $74. With TRIP being relegated to the SSR list, put volume has popped to 11 times what's typically seen at this point in the day. Drilling down, traders appear to be selling to close their now in-the-money November 75 puts, and selling to open the weekly 11/7 70- and 71-strike puts.

  • Ahead of tonight's quarterly earnings results, SolarCity Corp (NASDAQ:SCTY) was last seen 7% lower at $53.00. The stock is now sitting in the red on a year-to-date basis, and is on pace to close south of its 10-day moving average for the first time since Oct. 17. In the options pits, calls have emerged as the contracts of choice, and are trading at four times the expected intraday amount. Most active is the stock's November 60 call, which is seeing a mix of buy- and sell-to-open activity. Meanwhile, the November 62 call has also received notable attention from call writers, who may be hoping for a plunge in implied volatility after tonight's scheduled event. For SCTY's third-quarter, Wall Street is calling for a per-share loss of $1.11.
Published on Nov 5, 2014 at 11:56 AM
Updated on Mar 19, 2021 at 7:15 AM
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The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest today is American Airlines Group Inc (NASDAQ:AAL), where one trader is banking on a year-end stumble.

Most Active Options Table

American Airlines Group Inc is up a modest 0.6% around midday, at $42.95. While the equity's options pits aren't especially busy, short-term strikes are in focus, as the stock's 30-day at-the-money implied volatility has jumped 2.2% to 41.3%.

AAL's most active strike so far is the December 41 put, where nearly all of the 2,015 contracts on the tape crossed as a multi-exchange sweep about 10 minutes into the session. Specifically, one speculator bought to open 2,000 of the out-of-the-money puts at a premium of $1.50 apiece, yielding an initial cash outlay of $300,000 (premium * number of contracts * 100 shares per contract).

In so doing, the trader is anticipating AAL will breach $39.50 (strike less premium) by the close on Friday, Dec. 19, when the back-month options expire. Gains will accrue on a move all the way down to zero, while the maximum potential loss is limited to the premium paid, should shares of American Airlines Group Inc (NASDAQ:AAL) be perched at or above $41 when December options expiration rolls around.

Published on Nov 5, 2014 at 10:40 AM
Updated on Mar 19, 2021 at 7:15 AM
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Peabody Energy Corporation (NYSE:BTU) is seeing a rare move higher today, as the coal sector gets a lift from yesterday's Republican win in the midterm elections. The positive price action has sparked a rush of call activity in the equity's options pits, with volume crossing the tape at a rate four times the intraday average. Amid this accelerated activity, the stock's 30-day at-the-money implied volatility (IV) has edged 2.9% higher to 50.5% -- in the 97th percentile of its annual range.

Most active by a mile is BTU's January 2015 10-strike call, where 5,799 contracts have traded. (As a point of comparison, the next most active strike has fewer than 650 contracts on the tape.) A healthy portion of these calls have gone off at the ask price, IV is up 3.3 percentage points, and volume outstrips open interest -- all signs of buy-to-open activity. Delta on the call is docked at 0.63, suggesting a nearly 2-in-3 chance the stock will be perched in double-digit territory at the close on Friday, Jan. 16, when the series expires.

As noted, today's uptick runs counter to BTU's longer-term technical trajectory. In fact, the shares have surrendered 46% of their value this year to churn near $10.47. More recently, Peabody Energy Corporation (NYSE:BTU) has lagged the broader S&P 500 Index (SPX) by about 37 percentage points over the past three months.

Published on Nov 5, 2014 at 9:59 AM
Updated on Mar 19, 2021 at 7:15 AM
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Stratasys, Ltd. (NASDAQ:SSYS) has plunged 9.5% out of the gate to trade at $109.71 following this morning's earnings report. This bold move -- which isn't totally unexpected -- is likely being met with cheers and jeers in the 3-D printing stock's options pits, as call and put writers were both active yesterday. In fact, Tuesday's overall volume more than doubled the expected daily amount.

Diving right in, SSYS' most active strike yesterday was the weekly 11/7 130 call, where the majority of the 800 contracts traded crossed at the bid price. Open interest popped overnight, as well, making it safe to assume the positions were sold to open -- in the hopes the equity will remain below $130 through Friday's close, when the weekly series expires.

On the flip side, SSYS's next most active option was the weekly 11/7 110-strike put. It appears these, too, were sold to open. In other words, these traders expect the shares to remain above $110 through week's end.

This morning's gap lower is good news for the call writers, as delta on the out-of-the-money contract has dropped to just 0.01 from 0.22 last night, suggesting a 1% chance the option will be in the money at expiration. However, it's a different story for the put sellers, as their options are now in the money. Moreover, delta on the weekly 110 puts has shifted to negative 0.52 from negative 0.15 on Tuesday evening, meaning there's about a 1-in-2 chance the contract will land in the money Friday night.

As alluded to, Stratasys, Ltd. (NASDAQ:SSYS) is reeling on its most recent earnings report. While the company's third-quarter results actually topped the Street's estimates, the firm lowered its full-year earnings guidance due to increased expenses.

Published on Nov 4, 2014 at 1:56 PM
Updated on Mar 19, 2021 at 7:15 AM
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The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest today is Citigroup Inc (NYSE:C), as option bulls eye long-term upside .

Most Active Options Table

In early afternoon trading, Citigroup Inc calls outstrip puts by a greater than 2-to-1 margin. What's more, the financial stock's 30-day at-the-money implied volatility (IV) has edged 2.8% higher to 18.3%, signaling elevated demand for short-term strikes.

Nevertheless, it's the longer-term January 2015 62.50-strike call that is C's most active option. So far, roughly 6,350 contracts have been exchanged here, more than doubling the second most sought-after strike.

Looking more closely, all of the contracts at the deep out-of-the-money January-dated strike have crossed at the ask price, and IV has popped 2.1 percentage points, hinting at buy-to-open activity. This theory is partially corroborated by data from the International Securities Exchange (ISE). In short, these call buyers expect C to topple the $62.50 mark by January options expiration.

While Citigroup Inc (NYSE:C) hasn't seen such lofty levels since early 2009, the shares have been in a sharp rally after touching a mid-October low of $48.11. Currently sitting at $52.80, the stock has jumped nearly 10% since then, helped by a sharp bounce off of its 200-day moving average.

Published on Nov 4, 2014 at 1:04 PM
Updated on Mar 19, 2021 at 7:15 AM
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Option traders have taken a shine to online travel issue Priceline Group Inc (NASDAQ:PCLN), oil-and-gas concern Transocean LTD (NYSE:RIG), and upscale apparel provider Michael Kors Holdings Ltd (NYSE:KORS). Here's a look at how speculators have been placing their bets on PCLN, RIG, and KORS.

  • Priceline Group Inc (NASDAQ:PCLN) is wallowing in the red at midday, down 9.3% at $1,087.75, after the firm's fourth-quarter earnings forecast left much to be desired, and Benchmark slashed its price target to $1,400 from $1,550 (but retained its "buy" recommendation). Intraday options volume is running at nearly three times the average pace, and eleventh-hour bears are betting on more downside for PCLN through the end of the week, buying to open the weekly 11/7 1,100-strike put -- the most active contract so far.

  • Transocean LTD (NYSE:RIG) is swooning in step with crude oil futures, down 4.5% at $27.56. In fact, the equity is extending its journey into multi-year-low terrain, touching an intraday nadir of $27.08. Ahead of the company's turn in the earnings spotlight on Thursday afternoon, speculators are scrambling to place short-term bets; the stock's 30-day at-the-money implied volatility (IV) was last seen 16.5% higher at 51.2%. Most popular is the November 26.50 put, where almost all of the contracts have traded near the ask price, IV has popped 6.9 percentage points, and volume outstrips open interest -- collectively pointing to newly bought bearish bets. By purchasing the puts to open, the buyers expect RIG to steepen its slide and breach $26.50 by the close on Friday, Nov. 21, when front-month options expire.

  • Finally, Michael Kors Holdings Ltd (NYSE:KORS) is reeling -- despite reporting stronger-than-expected earnings and being upgraded to "buy" from "hold" (as well as seeing its price target upped to $100 from $80) at Jefferies -- after offering an unimpressive current-quarter outlook and projecting slowing same-store sales. Most recently, the shares were down 7.9% at $71.81. What's more, KORS is now docked on the short-sale restricted (SSR) list, forcing bears to the options pits. Intraday put volume is running at seven times the norm, with fresh positions detected at the weekly 11/14 70-strike put. By purchasing the puts to open, the traders expect KORS to backpedal south of $70 -- which corresponds with the equity's intraday low -- by the close on Friday, Nov. 14, when the options cease trading. Bullish holdouts, on the other hand, are purchasing to open November 70 calls, amid expectations for a post-earnings rebound in the short term.
Published on Nov 4, 2014 at 12:02 PM
Updated on Mar 19, 2021 at 7:15 AM
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The 20 stocks listed in the table below are the names that have attracted the highest weekly options volume during the past 10 trading days. Those highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest today is Amazon.com, Inc. (NASDAQ:AMZN), where short-term traders are gambling on the stock's end-of-week finish.

Most Active Weekly Options Table

Amazon.com, Inc. is off 1.5% around midday at $301.10, pressured lower by a successful turn in the earnings confessional from competitor Alibaba Group Holding Ltd (NYSE:BABA). Longer term, AMZN is now 24.5% south of breakeven on a year-to-date basis.

In today's options pits, short-term strikes are in demand, per the stock's 30-day at-the-money implied volatility, which is up 2.4% to 24.1%. In fact, each of AMZN's 10 most active options expire within the next three weeks.

Taking the top two positions are the weekly 11/7 300-strike put and 305-strike call. The puts are being bought to open, suggesting the traders anticipate the shares will breach the round-number $300 level by Friday's close -- when the weekly series expires. Conversely, the calls are being sold to open, as speculators bank on a short-term technical ceiling for the security.

Given Amazon.com, Inc.'s (NASDAQ:AMZN) on-chart struggles, it's no surprise to see options traders betting bearishly. Sentiment is different among the brokerage bunch, however, as 60% of covering analysts rate the equity a "buy" or better. Plus, the stock's consensus 12-month price target of $353.61 stands at a lofty 17.4% premium to current trading levels. From a contrarian perspective, this could potentially set up AMZN for an additional round of downgrades and/or price-target cuts.

Published on Nov 4, 2014 at 7:46 AM
Updated on Mar 19, 2021 at 7:15 AM
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Among the stocks attracting attention from options traders lately are Chinese Internet bigwig Alibaba Group Holding Ltd (NYSE:BABA), smartphone maker BlackBerry Ltd (NASDAQ:BBRY), and car concern General Motors Company (NYSE:GM). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on BABA, BBRY, and GM.

  • BABA ended 3.3% higher at $101.80, and touched a record high of $102.80 in intraday action, as traders bought in ahead of this morning's turn in the earnings confessional -- the first for Alibaba Group Holding Ltd since going public Sept. 19. BABA on Monday set a record for options volume, with nearly 350,000 contracts exchanged -- mostly on the call side, hinting at fresh bullish bets. That data echoes the growing trend seen on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), where speculators have bought to open 3.63 BABA calls for every put during the past couple of weeks. Traders have been paying a pretty penny for their short-term bets, historically speaking, as BABA's Schaeffer's Volatility Index (SVI) sits at an all-time high of 47%.

  • BBRY dipped 2.4% to $10.25, after CEO John Chen dispelled rumors of a $15-per-share buyout (it "way undervalues" the stock), as well as a potential breakup. Furthermore, Chen underscored BlackBerry Ltd's goal to rake in $100 million from its BBM messaging service in fiscal 2016. Despite today's pullback, BBRY remains 37.8% higher year-to-date; however, short sellers have been upping the bearish ante. Short interest grew 10.8% during the past two reporting periods, and now accounts for nearly 21% of the stock's total available float -- representing about eight sessions' worth of pent-up buying demand, at BBRY's average pace of trading. Some of those skeptics could be picking up options insurance via long calls, as the equity's 10-day ISE/CBOE/PHLX call/put volume ratio of 5.73 stands higher than 83% of all other readings from the past year, pointing to a healthier-than-usual appetite for calls over puts of late. Whatever the motive, BBRY's short-term options are relatively inexpensive, as the stock's SVI of 50% registers in the 21st percentile of its annual range. Plus, the security's Schaeffer's Volatility Scorecard (SVS) sits at a lofty 98, suggesting BBRY has tended to make outsized moves on the charts during the past year, relative to what the options market has priced in.

  • Finally, GM gave up 0.7% to land at $31.18 on Monday, after traders panned the company's disappointing October sales report. In addition, reports indicate the number of claims for injuries or deaths related to GM's faulty ignition switches rose 12% week-over-week, to 1,772. In 2014, the shares of GM have surrendered 23.7% of their value, yet option traders maintain rose-colored glasses. The equity's 10-day ISE/CBOE/PHLX call/put volume ratio stands at a 52-week peak of 7.43, indicating traders have bought to open GM calls over puts at fever pitch during the past two weeks. The stock's SVI of 23% stands higher than just one-third of comparable readings from the past year, suggesting General Motors Company's short-term options are attractively priced, relatively speaking.
Published on Nov 3, 2014 at 2:45 PM
Updated on Mar 19, 2021 at 7:15 AM
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Estee Lauder Companies Inc (NYSE:EL) is set to report fiscal first-quarter earnings bright and early tomorrow. Ahead of this event, the shares are sitting on an 0.8% gain at $75.79, and the stock's options are in high demand -- crossing at triple the usual intraday pace. What's more, EL's 30-day at-the-money implied volatility has ticked 2.4% higher to 25.2%, suggesting short-term strikes are being sought out.

Digging deeper, the cosmetics firm's most active strike is the November 75 put, where 1,128 contracts have been exchanged. Three-fifths have traded at the ask price, and just 264 contracts are in open interest, pointing to buy-to-open activity. Long story short, these buyers are gambling on EL to breach the strike by the close on Friday, Nov. 21, when the front-month options expire.

Taking a step back, EL is sitting on a slim year-to-date gain of 0.5%, and has spent the majority of the past 1.5 months churning below $75. As such, delta on the out-of-the-money call sits at negative 0.43, denoting a better than 2-in-5 chance the option will be in the money at expiration.

As alluded to earlier, Estee Lauder Companies Inc (NYSE:EL) will release quarterly results tomorrow morning, and the Street is anticipating a per-share profit of 55 cents. Historically, the stock has done well following earnings, averaging a 1.3% gain in the session following its last eight reports.

Published on Nov 3, 2014 at 2:09 PM
Updated on Mar 19, 2021 at 7:15 AM
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The 20 stocks listed in the table below are the S&P 500 Index (SPX) components that have attracted the highest weekly options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest today is Internet issue Yahoo! Inc. (NASDAQ:YHOO), as option traders roll the dice on an Alibaba Group Holding Ltd (NYSE:BABA) halo lift.

Most Active Weekly Options Table

Yahoo! Inc. tagged a fresh 14-year peak of $46.72 earlier, but was last seen 1.1% higher at $46.54. In the stock's options pits, calls are outpacing puts by a nearly 2-to-1 margin, and per the equity's 30-day at-the-money implied volatility (IV), which is up 1% at 31.8%, short-term contracts are in high demand. Drilling down, speculators are wagering on the stock to get an earnings-induced halo lift from Alibaba Group Holding Ltd (NYSE:BABA) -- in which YHOO owns a major stake -- after it takes its inaugural turn in the confessional tomorrow morning.

Specifically, YHOO's weekly 11/14 48.50-strike call has received notable attention, with 5,070 contracts on the tape at last check. The majority of these crossed at the ask price, IV is up 3 percentage points, and only 55 contracts are currently in residence here, making it safe to assume new positions are being purchased.

Based on the volume-weighted average price (VWAP) of $0.47, at-expiration breakeven for today's call buyers is $48.97 (strike plus VWAP) -- territory not charted by YHOO since September 2000. Gains will accumulate on a move north of here, while losses are limited to the initial premium paid, should Yahoo! Inc. (NASDAQ:YHOO) settle south of the strike at next Friday's close, when the weekly series expires.

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