Luxury apparel stock Ralph Lauren Corp (NYSE:RL) has been in a channel of higher highs and lows since June 2017, with pullbacks contained by its 80-day and 100-day moving averages. The shares have rallied more than 56% in the past year, and notched a three-year high of $147.90 after earnings on July 31, before taking a breather. What's more, there could be more gas in the tank for Ralph Lauren stock, which remains unappreciated on Wall Street. At last check, the shares were up 1.5% at $136.25.

According to data from Schaeffer's Senior Quantitative Analyst Rocky White, Ralph Lauren sports one of the best year-to-date returns in the underloved personal goods sector, yet boasts very few "buy" ratings from analysts -- making it an attractive contrarian trade. Specifically, just 13% of analysts consider RL worthy of a "buy" or better endorsement. A round of well-deserved upgrades could propel the shares even higher.

Short interest on Ralph Lauren stock fell nearly 9% during the most recent reporting period, but still represents more than 11% of the stock's total available float. At RL's average daily trading volume, it would take over eight sessions for shorts to cover their remaining bearish bets. That's ample sideline cash to drive RL to new heights.

Lastly, now may also be an affordable time for short-term traders to jump on the RL bandwagon. This is per the equity's Schaeffer's Volatility Index (SVI) of 26%, which ranks in the 12th annual percentile -- meaning near-term options are pricing in relatively low volatility expectations at the moment.

The Cboe Volatility Index (VIX - 10.72) -- considered the stock market's "fear gauge" -- has dropped roughly 16% already in August, and today is eyeing a sixth straight loss and its lowest close since January. However, recent VIX options activity suggests traders are speculating on (or hedging against) a surge for the index.

The VIX 20-day buy-to-open (BTO) call/put ratio has been rising in recent weeks, and recently clocked in at 5.55 -- the highest since mid-July 2017 (during a similar Nasdaq winning streak, in fact). Echoing that, the 30-day implied volatility skew on VIX options is now at an annual low, suggesting near-term puts have rarely been cheaper than calls in the past year.

In the past two weeks, the deep out-of-the-money VIX December 47.50 call has seen the biggest surge in open interest, with more than 113,000 contracts added. With the VIX currently just below 11, the fear index would need to more than quadruple by the end of the year for these calls to move into the money. Meanwhile, the September 20 and 21 calls, as well as the October 25 call, each saw more than 55,000 contracts added in the past two weeks.

Perhaps some of the recent out-of-the-money VIX call buying is attributable to shorts seeking an options hedge. As of July 31, Commitments of Traders (CoT) data showed large speculators -- a group that has been notoriously wrong on VIX -- were net short VIX futures by the most since mid-December. Plus, the VIX has been known to burst higher in the August-October period.

Whatever the motive, the Cboe Volatility Index has historically popped a week after its 20-day BTO call/put ratio exceeds 5.5. According to data from Schaeffer's Quantitative Analyst Chris Prybal, the VIX has averaged a one-week gain of 9.2%, and was higher 100% of the time after signals since 2010, of which there have been six. That's compared to an average anytime one-week gain of just 1.2%, with a positive rate of 47%, looking at VIX data since 2010.

Likewise, the S&P 500 Index (SPX) tends to dip after the VIX 20-day BTO call/put ratio tops 5.5. One week later, the SPX was down 0.6%, on average, and higher just 33% of the time. That's compared to an average anytime one-week return of 0.2%, with a 60% win rate, looking at data since 2010.

By two months later, however, the VIX has typically reversed lower. The fear gauge was down 2.3%, on average, and higher just once after the last six signals. The S&P 500, meanwhile, was up 2.3%, on average, two months after a VIX options signal -- slightly better than its average anytime two-month gain of 1.9%.

Technology infrastructure concern Switch Inc (NYSE:SWCH) is about to release earnings for the fourth time since going public in October, with the company set to report after the close Monday, Aug. 13. Last quarter, the shares fell 14.9% the day after earnings, and 15.6% the quarter before that. Going by options data, Wall Street is expecting another huge move this time, with implied volatility data pricing in a 12.5% swing for Tuesday's session.

Such a bleak history doesn't bode well for a stock that has struggled so poorly on the charts. SWCH has carved out a series of lower highs and lows since its October IPO. Year-to-date, the equity has shed 24%, guided lower by its descending 120-day moving average since March. SWCH fell to a record low of $11.85 on June 28, and another post-earnings move to the downside could have the stock testing these lows once more. 

Continued technical struggles could spark a flurry of bear notes. Of the 10 brokerages covering SWCH, 70% rate it a "buy" or "strong buy," with zero "sells" on the books. Furthermore, the security's average 12-month price target of $16.82 is a 22% premium to its current perch of $13.85. Downgrades and/or price-target cuts could certainly pressure the beleaguered stock lower.

Meanwhile in the options pits, the top open interest strike by far is the August 15 call, with more than 3,000 contracts outstanding. At the same time, any call activity on SWCH could be coming from short sellers hedging, with more than one-third of the total float tied up in short interest.

U.K.-based energy concern TechnipFMC (NYSE:FTI) is slightly higher in afternoon trading, last seen up 0.3% at $30.07. The stock has pulled back since its late-July post-earnings surge, moving just below its year-to-date breakeven mark. However, now may be an ideal time to buy the dip on the energy name.

FTI stock is now within one standard deviation of its 200-day moving average, after a lengthy stretch above this trendline. There have been three similar pullbacks for FTI in the past, after which the stock went on to average a one-month gain of 5.8%, per data from Schaeffer's Senior Quantitative Analyst Rocky White. Further, the shares could find support atop a trendline that's connected higher lows since November.

In the options arena, the energy stock's Schaeffer's put/call open interest ratio (SOIR) of 0.19 indicates that calls more than quintuple puts among options expiring in the next three months. Further, this SOIR ranks in the 13th percentile of its annual range, meaning short-term speculators have rarely been more call-heavy in the past year.

Digging deeper, it seems traders are expecting a short-term bounce for TechnipFMC stock. The August 32 call saw the largest increase in open interest during the past 10 sessions, with more than 14,000 contracts added during this time frame, and data from the major options exchanges suggests a heavy amount of buy-to-open activity. The August 32 call is now home to nearly 17,000 contracts outstanding -- peak open interest among all strikes.

After spending most of the second-quarter bottoming around the $12.50 level, shares of GameStop Corp. (NYSE:GME) have slowly but steadily battled back from their year-to-date lows. The stock has gained 24% from its May 18 closing low of $12.46, and GME has actually outperformed the S&P 500 Index (SPX) by more than 15 percentage points over the past 40 sessions. However, history suggests that the recent push higher by GME stock might actually be an ideal entry point for a bearish trade.

GME Tends to Fail 200-Day Tests

Specifically, GME has now rallied up to trade within one standard deviation of its 200-day moving average. According to Schaeffer's Senior Quantitative Analyst Rocky White, there have been four occasions over the past three years where GameStop stock has risen to challenge its 200-day trendline after spending a prolonged period of time beneath it -- and the results following prior signals are less than stellar.

In fact, five days after a signal, the stock is down 4.2% on average, with only 25% positive returns. And looking out one month after a GME test of 200-day resistance, the 25% positive rate remains the same -- but the average return widens to a drop of 8.9%. From GME's current perch at $15.47, that would put the shares at $14.09 by this time next month.

This latest GME sell signal coincides with the stock's as-yet unsuccessful attempts to surmount the $15.50 neighborhood. This chart region briefly provided a floor for the shares in February and early March, but has more recently emerged as a troublesome technical hurdle that has kept all of GME's rally attempts in check since mid-June.

From a broader perspective, the stock has been facing pressure at its 200-day moving average for just over two years. Over that time frame, GME has lost about half its value.

Post-Earnings Bias Could Be to the Downside Again

Looking ahead, GME is tentatively expected to report earnings in late August. As such, the equity's 30-day at-the-money implied volatility (IV) is somewhat elevated, at 50.2%. This reading registers in the 74th percentile of its annual range. On the other hand, the stock's 30-day IV skew of 6.2% stands in just the 36th annual percentile, which means short-term GME put options are pricing in a lower-than-usual volatility premium relative to their call counterparts.

That's an interesting development ahead of earnings. Over the past eight quarters, GME has averaged a single-day price swing of 8.5% immediately following its earnings announcement, regardless of direction. Five of those post-earnings moves have been negative, with the average drop totaling 10.4%; meanwhile, the three positive moves delivered an average gain of 5.3%.

With the better part of earnings season winding down this past week, we head into the summer doldrums of August -- a notorious period in the market for volatility spikes when volume tends to dry up. Financial media has been highlighting this seasonally tough period and the current geopolitical risks for the last few weeks in anticipation, but the stock market kept marching higher in the face of headlines on the back of great earnings reports. According to FactSet, so far, the companies in the S&P 500 Index (SPX - 2,833.28) are reporting 24.6% growth in Q2 2018, which would be the second-highest earnings growth since Q3 2010. 

Judging by last week's market action, pundits will point to the S&P 500 reversal on Friday that erased all weekly gains as a potential indicator for a further pullback. The SPX traded in a narrow range mid-week and hovered near 2,865, a dual resistance area, which was identifiable as the index rode the top of a trend channel that formed from the triangle breakout in early May. With the all-time closing high only a chip-shot away at 2,872.87, this area of resistance proved to have plenty of overhead supply. 

Also, it's rare to go straight through all-time-highs without consolidations, justifying a pullback. New geopolitical issues -- the Turkey crisis -- happened to be the perfect excuse for a quick gap down Friday. Although, tariffs issued by the Trump administration last week and the ongoing currency crisis in Turkey's economy should have relatively little effect on the U.S. markets. Note, Turkey is only the 18th largest nation by gross domestic product (GDP), and ranked 31st among the United States' top trade partners.

While the S&P 500 was negative on the week, the Nasdaq Composite (IXIC - 7,839.11) and Russell 2000 Index (RUT - 1,686.80) were able to finish positive, but both indexes were unable to get through round-number resistance areas. The Nasdaq stalled at the 15% year-to-date (YTD) mark, while the Russell hasn't been able to make it through the 10% YTD level during the past two months. The Invesco QQQ Trust (QQQ - 180.52) is searching for support at the 180 level, after pushing through prior resistance and 50% above the 2000 peak earlier in the week. As we mentioned last week, the S&P Mid Cap 400 Index (MID - 1,996.02) is also searching for support near the round-number level of 2,000, after breaking above this area mid-week. 

As for the U.S. economy this past week, the market received few economic updates, with jobless claims, the consumer price index (CPI), and U.S. Department of Agriculture (USDA) crop reports being the only potential market movers. The CPI gained 0.17% for July, which was in line with estimates, and jobless claims came in slightly better than expected. However, the USDA crop reports were negative Friday, as expected, and we saw pressure in the respective commodity markets, which could have added negative pressure to Friday's sell-off.

The market is searching for slumping economic data points, but so far nothing has suggested that a recession is in the near-term future other than the fear of a flattening yield curve. However, we know a flattening yield curve can last longer than most expect and is overblown as a short-term indicator, like I mentioned the other week. 

"This August has been remarkably calm for the stock market, but history suggests it may not last."
-- The Wall Street Journal (subscription required), August 10, 2018

Without slumping economic data points, financial strategists and pundits have relied on seasonality as a potential catalyst for a sell-off. Indeed, August can often be the start of seasonal corrections for the broader markets. That's a fact when you look at the data over the last two decades, but that doesn't mean we're necessarily due for an imminent correction as some have suggested, or that we'll finish negative for the month. 

According to Reuters data, August is the second-worst month on average, dropping 0.33% monthly -- behind only September's average monthly loss of 0.40% -- during the last two decades. When you increase or decrease this time frame, these conclusions can change drastically. 

Taking a longer-term view, we find that August has a positive average monthly return of 0.55% when going back to 1928, and September is by far the worst month, with an average monthly loss of 1.00%. Now, looking at the past decade, August has generated a loss of 0.70%, on average, while September is positive by 0.76% -- a surprising revelation. The point I want readers to take away is, returns vary throughout time. 

When analyzing these seasonal trends and patterns, I found that over the last decade, when the first five trading days in August were positive, except for 2010, the month ended positively. Conversely, when the first five trading days of August were negative, the month ended negatively every time. Thus, this seasonal analysis has some statistical significance, since the prevailing trend has been correct nine times out of 10. 

 "As we mentioned back in June, the month after Fed hikes, the SPY has had a median return of negative 0.42%. This played into our short-term outlook for the last four weeks, but that timeframe is now behind us. According to Reuters data, market participants are currently pricing in a 2.6% chance that the Fed will raise rates on Aug. 1. This could be a potentially bullish catalyst for markets, especially if we are close to testing all-time highs, because the SPY median return after the Fed holds rates is 1.77%."
-- Monday Morning Outlook, July 16, 2018

Devoted readers are also aware that during the current rate-tightening cycle, equity markets have underperformed or experienced a drawdown in the month following a rate hike, while showing a tendency to rally when the Fed holds steady. With both analyses being favorable for August, we could see a positive month, which is contrarian to the broader media news cycle.

"One scenario is that this caution represents buying power in the immediate days ahead, especially with the SPX trading around multi-month highs on the heels of the Fed's 'pause' last week. Another potential scenario is the strategists being correct about the risks, but early on the timing. With an expected rate hike at the September FOMC meeting, which will likely coincide with a ramp-up in midterm election uncertainty, perhaps their case for a pullback becomes stronger roughly six weeks from now."
-- Monday Morning Outlook, August 6, 2018

Sentiment has remained tempered as many market participants have mixed-to-negative views, which further complements a potential bullish scenario for August. In the most recent weekly American Association of Individual Investors (AAII) survey, bullish sentiment increased by 7.3 percentage points, but still isn't even at the historical average of 38.3%, suggesting that retail money remains on the sidelines. Meanwhile, the 10-day equity-only, buy-to-open put/call volume ratio rose again last week and appears to be finding a bottom above 0.60, which last week we mentioned preceded a spring rally. 

Contrary to the above indicators is the Cboe Volatility Index (VIX - 13.16) 20-day buy-to-open call/put volume ratio, which moved to 5.55 and is the most elevated reading since mid-July 2017. We recently highlighted that this could be a red flag for investors. In addition, the VIX hit a low of 10.17 intraday last Thursday. Meanwhile, the Commitment of Traders (CoT) data showed large speculators were net short VIX futures by the most since December. Moving forward, we will keep this on our radar since large speculators have been caught flat-footed ahead of every significant VIX move since 2014.

Continue reading:

• Indicator of the Week: 2 Sectors Contrarian Traders Should Target
• The Week Ahead: Triple Dose of Dow Earnings Next Week
  
  

Home Depot Inc (NYSE:HD) is one of three Dow names slated to report this week, with the company's second-quarter earnings scheduled to surface before the market opens, tomorrow, Aug. 14. Below, we will take a look at how the blue chip has been faring on the charts, and dive into what the options market is pricing in for the stock's post-earnings move.

Last seen slightly higher at $196.56, HD has been moving higher on the charts since bottoming out near $170 and the 200-day moving average in early April. More, recently, the stock has been moving sideways, stuck between $204 and a floor of support near $194, right above the year-to-date breakeven point.

Digging into HD's earnings history, the stock has closed lower the day after the company reports in five of the last eight quarters, including a 2.7% drop this time last year. Looking back eight quarters, the shares have moved 1.4% the day after earnings, on average, regardless of direction. This time around, however, the options market is pricing in a much-bigger 6% move for tomorrow's trading.

In terms of options data, traders have been heavily bullish toward HD. This is per the stock's 10-day call/put volume ratio of 2.93 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks in the 97th annual percentile. In other words, during the past two weeks, calls have been purchased over puts at pace of nearly 3-to-1.

Analysts have also been showing optimism toward Home Depot. Of the 26 firms in coverage, only five carry tepid "hold" ratings. Plus, the home improvement stock's average 12-month price target of $213.07 comes in at an 8.4% premium to current levels.

Not to be confused with video game craze Fortnite, Fortinet Inc (NASDAQ:FTNT) has climbed up the charts in 2018, and recently gapped higher following an upbeat earnings report earlier this month. Making it even more intriguing, data suggests that now might be an appealing time for a bullish play on the cybersecurity name.

At last check, FTNT was down 0.2% to trade at $75.16, but is fresh off a record high of $75.78 from Friday. Meanwhile, the equity's Schaeffer's Volatility Index (SVI) -- a measure of front-month, at-the-money implied volatility (ATM IV) -- currently stands at just 25%. This SVI arrives in the 12th percentile of its annual range, indicating that speculative players have priced in lower volatility expectations just 12% of the time in the past year.

This combination of a high stock price and low IV has had bullish implications for FTNT in the past, according to Schaeffer's Senior Quantitative Analyst Rocky White. Since 2008, there has been four occasions where FTNT has been trading within 2% of its annual high while at the same time its SVI was in the 20th annual percentile or lower. Following those signals, the security was up 5.72% one month later, on average, and was higher a month later three times.

Looking at the charts, Fortinet stock has more than doubled year-over-year. The shares pulled back in early May and late July, only to bounce off their 60-day moving average, a trendline of support in place since October. The equity has not posted a losing month since September. 

The red-hot stock could also benefit from a round of upgrades and/or price-target hikes. Of the 22 brokerages covering FTNT, 13 rate the share a tepid "hold." In addition, its average 12-month price target of $73.25 sits below the current perch. 

Retail earnings season is heating up, and Cincinnati-based department store chain Macy's Inc (NYSE:M) is preparing to unveil its second-quarter results before the stock market opens tomorrow, Aug. 15. Ahead of the event, M stock is trading up 2.6% at $41.11, but options traders have been bracing for a quick post-earnings retreat.

In fact, short-term speculators are much more put-heavy than usual toward the retailer. Schaeffer's put/call open interest ratio (SOIR) for Macy's stock is docked at a top-heavy 1.75, and ranks in the 75th annual percentile -- pointing to a heavy put-skew in the front three-months' series of options.

Drilling down, peak open interest in the front-month series -- which expires at the close this Friday, Aug. 17 -- is found at the August 36 put, where 21,138 contracts currently reside. Data from Trade-Alert suggests significant buy-to-open activity here in late May when Macy's was trading near $34, indicating options traders were expecting a lackluster summer for the retail stock.

However, data also confirms some sell-to-open activity here. While it's possible some speculators are using these short puts to set a floor for M shares, it's more likely they're hoping to capitalize on a post-earnings volatility crush -- which would theoretically make it cheaper to buy back the options.

It's certainly a prime time to sell premium on M puts. Not surprisingly, the stock's 30-day at-the-money implied volatility (IV) is elevated ahead of tomorrow's event -- last seen at 50.3%, which registers in the 81st annual percentile. Plus, the stock's 30-day IV skew of 8.6% ranks in the 83rd percentile of its annual range, indicating short-term Macy's puts are pricing in higher-than-usual volatility premium relative to calls.

Historically speaking, Macy's is coming off three straight positive earnings reactions -- averaging a next-day gain of 8.4%. On average, the shares have swung 10% in the session subsequent to the retailer's report over the last eight quarters, regardless of direction. This time around, the options market is pricing in a bigger 14% swing for tomorrow's trading.

Another move to the upside could have more shorts jumping ship. Although short interest plunged 10% in the most recent reporting period, there are still 42.32 million M shares sold short. This represents almost 14% of the security's available float, or 6.4 times the average daily pace of trading.

It's possible this latest round of short covering helped fuel a big bounce off the stock's 50-day moving average, too. Not only has this trendline helped Macy's shares more than double on a year-over-year basis, but the equity is up 15.8% since ricocheting off here in mid-July.

Cisco Systems, Inc. (NASDAQ:CSCO) stock is up 0.4% at $43.92 in afternoon trading, as traders prepare for the second of three blue-chip earnings reports this week. Cisco Systems is set to follow Home Depot (HD) into the earnings confessional, with the tech company scheduled to report fiscal fourth-quarter earnings after the market closes tomorrow, Aug. 15. Below, we will take look at how CSCO has been faring on the charts, and what the options market is pricing in for the stock's post-earnings moves.

Cisco Systems stock notched a 17-year high of $46.37 on May 10. However, the shares gapped lower after the company's mid-May earnings release, and subsequently embarked on a journey of lower lows. CSCO found support in the $41 region, which contained an April pullback and is home to the equity's 200-day moving average. The Dow name is up 14.7% year-to-date. 

Looking at Cisco Systems' earnings history, the stock has closed lower the day after the company reported in five of the last eight quarters, including the aforementioned 3.8% drop in May. Looking back eight quarters, the shares have moved 4.1% the day after earnings, on average, regardless of direction. This time around, however, the options market is pricing in a larger-than-usual 6.8% move for Thursday's trading.

In the options pits, CSCO's Schaeffer's put/call open interest ratio (SOIR) of 0.74 ranks in the 37th annual percentile. This relatively low SOIR reveals that calls outnumber puts by a slightly wider-than-usual margin among options set to expire within three months.

Looking closer, the overhead August 45 call is home to peak open interest in the front-month series, with more than 20,000 contracts outstanding. However, it appears a healthy portion of the August 45 calls were actually sold to open. This indicates options traders expect the $45 level -- which coincides with where CSCO was trading prior to the May bear gap -- will hold as a short-term ceiling for the shares.

Analyst sentiment is extremely bullish toward Cisco Systems stock. Of the 18 brokerage firms following the blue-chip concern, 16 sport "buy" or "strong buy" ratings. Plus, CSCO's average 12-month price target of $49.56 represents 12.7% upside to current levels, and is in territory not charted since 2000.

Last week the Cboe Volatility Index (VIX) closed below 11 for the first time since January. The VIX measures the implied volatility of the S&P 500 Index (SPX) over the next 30 days. In short, the options market is expecting extremely low volatility, for the next month or so. Since volatility tends to move opposite of price action in equities, it’s not too much of a stretch to say the VIX is predicting bullishness for stocks over the next month. This week, I'll look at prior dips below this 11 level to see how often the options market got it right.

S&P 500 Returns When VIX Closes Below 11

Since the VIX started trading in 1990, there have been 10 other times that the volatility index crossed below 11 after trading above that level for at least three months (63 trading days to be specific). The table below summarizes how the S&P 500 performed after those instances. For comparison, I also show typical returns since 1993, the year of the first signal.

These signals have been bullish for stocks, just as the VIX (indirectly) predicts. The next month after these signals, the S&P 500 averaged a gain of 0.79% and was positive 80% of the time. The more impressive returns were further out. The index was positive nine of 10 times when you go to three and six months, and the average return easily outperformed the typical average return at those longer time frames. These VIX signals also got volatility right: The standard deviation of returns after these signals are much lower than normal.

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The one-month returns above, while bullish, were the least impressive of the three time frames I looked at. However, look at the individual occurrences in the table below. The index returns were positive the last eight times in a row. If you get rid of the two negative 1993 occurrences, the one-month returns averaged a gain of about 1.4% and are positive every time.

The VIX After Closes Below 11

So, we looked at how the S&P 500 does after these signals, but what about the VIX itself? Though the VIX tends to move opposite of stocks, in this case, with the VIX hitting such a low level, you typically get a higher VIX going forward too. Over the next month after these signals, the VIX gained on average 17.3%, with nine of 10 returns positive. Looking at just the last eight occurrences (when the S&P 500 was positive every time), the VIX averages a gain of 13.6%. The one time the VIX fell, it fell less than one percent.

In conclusion, these signals have been a good sign for stocks going forward. Based just on these numbers, there is an increased probability of low volatility and higher stock prices over the next few months. The VIX, based on this, is probably close to a bottom.

U.S.-listed Chinese tech stocks are taking a hit today on negative earnings reaction for Tencent. One name selling off is mobile messaging app maker Momo Inc (NASDAQ:MOMO), last seen down 4.9% at $35.13. Nevertheless, this could be creating an intriguing trade opportunity, with the equity pulling back to a trendline that's marked attractive entry points in the past.

Specifically, MOMO is now trading within one standard deviation of its 200-day moving average. According to Schaeffer's Senior Quantitative Analyst Rocky White, there have been three other times in the last three years that the equity has pulled back to this trendline after an extended period of time above it, and the post-signal returns are encouraging.

For instance, one week after a signal, MOMO stock has averaged a gain of 5.97%, with a 100% win rate. Widening the scope to 21 days, or one trading month, Momo was up 10.13%, on average, with two-thirds of those returns positive. Based on its current perch, another move of this magnitude would put the shares back near $39.

Supporting the theory of a near-term bounce is the fact that MOMO shares are currently oversold. Following a nearly 35% plunge from its mid-June record high of $54.24, the security's 14-day Relative Strength Index (RSI) was most recently seen at 28.28 -- its lowest reading since Dec. 1, which preceded a more than 140% rally to that recent peak.

What's more, Momo is scheduled to report earnings before the market opens next Wednesday, Aug. 22. The stock has averaged a next-day gain of 12.1% following the company's last two turns in the earnings confessional.

Those looking to bet on a repeat of history may want to consider Momo call options. The stock's 30-day implied volatility skew of 5.4% ranks in the 86th annual percentile, meaning short-term calls are pricing in lower volatility expectations than their put counterparts.

Plus, MOMO stock's Schaeffer's Volatility Scorecard (SVS) is docked at an elevated 76 out of a possible 100. This indicates the equity has tended to make outsized moves over the past year, compared to what the options market has priced in -- a boon to potential premium buyers.