Earnings on Deck: Facebook Inc (FB), Gilead Sciences, Inc., and SodaStream International Ltd

FB, GILD, and SODA are gearing up to take their turns in the earnings confessional

Oct 28, 2014 at 10:40 AM
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Earnings season is in full swing, and today, traders are digesting the latest quarterly results from Twitter Inc (NYSE:TWTR) and Pfizer Inc. (NYSE:PFE), among many others. Looking ahead, social network giant Facebook Inc (NASDAQ:FB), biopharmaceutical firm Gilead Sciences, Inc. (NASDAQ:GILD), and at-home beverage maker SodaStream International Ltd (NASDAQ:SODA) are all on deck to report earnings.

  • It's been quite a year for FB, which has rallied 48% to trade at $80.75 -- and earlier today, tagged a fresh all-time high of $81.16. If history is any guide, the equity could continue this record-setting run after it unveils its third-quarter earnings report this evening. Over the past four quarters, in fact, FB has averaged a single-session post-earnings gain of 5.2%. On the sentiment front, option traders have been far from enthusiastic toward FB, as evidenced by the equity's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.76, which ranks higher than 99% of other such readings taken over the past year. Given Facebook Inc's technical tenacity, though, a portion of this activity -- particularly at out-of-the-money strikes -- could be at the hands of shareholders protecting paper profits against any unexpected earnings-induced downside.

  • GILD will also step up to the earnings plate after tonight's close, and Wall Street is expecting the company to post a third-quarter profit of $1.92 per share. On the charts, GILD is enjoying a 51% year-to-date lead, and just this morning, the stock hit the $114.13 mark -- its highest perch on record -- before easing back to its current perch at $113.30. Short-term option traders have shown a preference for puts over calls, per GILD's Schaeffer's put/call open interest ratio (SOIR) of 1.04, which ranks in the 75th percentile of its annual range. In the front-month series, specifically, peak put open interest can be found at the November 100 strike, where 8,662 contracts reside. Drilling down, there's been a fairly even mix of buy- and sell-to-open activity here, according to data from the ISE, CBOE, and PHLX. For those initiating long puts, the goal is for Gilead Sciences, Inc. to surrender its perch atop the century mark, while those writing the puts expect this level to serve as a short-term floor.

  • SODA is higher this morning -- up 1.8% at $22.38 -- following two sessions of massive price moves. The stock's volatility could continue in tomorrow's session, after the company unveils its third-quarter earnings report ahead of the open. In two of the past four quarters, the security has experienced double-digit percentage moves in the session subsequent to reporting -- one to the upside and one to the downside. Sentiment suggests traders are hoping for the latter, as SODA's 10-day put/call volume ratio of 1.42 at the ISE, CBOE, and PHLX ranks in the bearishly skewed 90th annual percentile. This skepticism is witnessed outside of the options pits, too, where more than one-quarter of SodaStream International Ltd's float is sold short.

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