Earnings Preview: Akamai Technologies, Inc., AOL Inc., and PepsiCo, Inc.

Analyzing recent option activity on Akamai Technologies, Inc. (AKAM), AOL, Inc. (AOL), and PepsiCo, Inc. (PEP)

by Griffin Kruse

Published on Feb 9, 2015 at 3:51 PM
Updated on Apr 20, 2015 at 5:32 PM

Among the stocks gearing up to report earnings data this week are cloud concern Akamai Technologies, Inc. (NASDAQ:AKAM), web services company AOL, Inc. (NYSE:AOL), and beverage giant PepsiCo, Inc. (NYSE:PEP). Below, we'll break down how options traders are positioning themselves, and how much speculators are willing to pay for their bets on AKAM, AOL, and PEP.

  • AKAM is down about 0.1% today to trade at $61.12 ahead of its fourth-quarter earnings release, scheduled for tomorrow after the close. Looking back, the shares of Akamai Technologies, Inc. have added 18.1% since touching a mid-October low of $51.74. However, unlike what we've observed among the brokerage bunch, sentiment in the stock's options pits is at a bearish peak, with its 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.81 ranking higher than all similar readings from the past year. An unwinding of this pessimism could provide tailwinds. Moreover, in the session following its last eight earnings reports, AKAM has notched an average gain of 2%. Speculators are paying expensive prices for their short-term bets on the equity, per its Schaeffer's Volatility Index (SVI) of 54%, which sits in the 85th percentile of its annual range.

  • AOL, which will report its fourth-quarter earnings before the open Wednesday, has added 0.6% this afternoon to reach $44.45. On the charts, AOL, Inc. has rallied 37.6% since touching an annual low of $32.31 on May 7. Surprisingly, sentiment in AOL's options pits is bearish, with its 50-day ISE/CBOE/PHLX put/call volume ratio of 1.31 sitting just 4 percentage points from an annual high. Should the shares continue to ascend, a mass exodus of bears could boost the equity even higher. Historically, the company has moved an average of 7.4% in the session following its last eight earnings releases, including a 7.5% gain last August. Traders are paying premium prices for their near-term bets on AOL, as its SVI of 64% is the highest such reading taken over the past year.

  • PEP is down 0.9% today to hit $95.91, as the company prepares to release its fourth-quarter earnings data before the open Wednesday. Despite today's decline, PepsiCo, Inc. has been a technical beast , adding roughly 19% year-over-year. In spite of this uptrend, sentiment in the stock's options pits is bearish, with PEP's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.69 sitting in the 66th percentile of its annual range. Looking back, PEP has averaged a 0.7% increase in the session immediately following its last eight earnings reports. Short-term options for the equity are currently expensive, with PEP's SVI of 18% sitting in the 82nd annual percentile.


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