Earnings Preview: ARIAD Pharmaceuticals, Inc., Priceline Group Inc., and Wal-Mart Stores, Inc.

Analyzing recent option activity on Ariad Pharmaceuticals, Inc. (ARIA), Priceline Group Inc (PCLN), and Wal-Mart Stores, Inc. (WMT)

by Griffin Kruse

Published on Feb 18, 2015 at 4:48 PM
Updated on Apr 20, 2015 at 5:32 PM

Among the stocks gearing up to report earnings tomorrow are drugmaker Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA), travel website Priceline Group Inc (NASDAQ:PCLN), and blue-chip retailer Wal-Mart Stores, Inc. (NYSE:WMT). Below, we'll break down how options traders are positioning themselves, and how much speculators are willing to pay for their bets on ARIA, PCLN, and WMT.

  • ARIA, which will release fourth-quarter earnings tomorrow morning, has been gaining ground -- due in part to last week's proxy-related pop -- with the shares advancing 6.8% year-to-date to hit $7.34. Furthermore, puts have been popular in the stock's options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), ARIA's 50-day put/call volume ratio of 0.22 ranks in the 92nd annual percentile, meaning puts have been bought to open over calls at a near-annual high clip. Traders looking for a negative post-earnings reaction have history on their side; in the session following its last four earnings releases, ARIA has lost an average of 2.9%. Short-term speculators are paying inexpensive prices for the stock's options, as its Schaeffer's Volatility Index (SVI) of 64% sits in the 24th percentile of all similar annual readings.

  • Ahead of tomorrow morning's earnings release, PCLN is down 11.8% year-over-year to reach $1,122.99. In the options pits, Priceline Group Inc's Schaeffer's put/call open interest ratio (SOIR) of 1.05 sits in the 85th percentile of its annual range, suggesting an above-average put-bias among short-term traders. Meanwhile, in the session following its last eight earnings reports, the shares of PCLN have experienced moves to the upside six times. Near-term options for the equity are currently available for slightly below-average prices, as its SVI of 29% sits in the 40th percentile of its annual range.

  • The shares of WMT have been trending upwards, with the security up 15.3% year-over-year to hit $86.29. On the sentiment front, call buying has been popular in the stock's options pits, ahead of tomorrow morning's quarterly results, which signifies the unofficial end to earnings season. Specifically, Wal-Mart Stores, Inc.'s 10-day ISE/CBOE/PHLX call/put volume ratio of 5.41 ranks higher than 94% of comparable readings taken in the past year. Looking back, in the session following its last eight earnings reports, WMT has moved an average of 1.9%. Traders are paying middling prices for their short-term bets on the stock, as its SVI of 19% sits in the 46th percentile of all similar annual readings.

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