Earnings Preview: Chesapeake Energy Corporation, Lowe's Companies, Inc., and SodaStream International Ltd.

Analyzing recent option activity on Chesapeake Energy Corporation (CHK), Lowe's Companies, Inc. (LOW), and Sodastream International Ltd (SODA)

Feb 24, 2015 at 1:11 PM
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Among the stocks gearing up to report fourth-quarter earnings tomorrow morning are oil-and-gas producer Chesapeake Energy Corporation (NYSE:CHK), retailer Lowe's Companies, Inc. (NYSE:LOW), and at-home carbonation specialist Sodastream International Ltd (NASDAQ:SODA). Below, we'll break down how options traders are positioning themselves, and how much speculators are willing to pay for their bets on CHK, LOW, and SODA.

  • CHK has been a technical laggard, with the shares down roughly 22.1% year-over-year to reach $19.85. Accordingly, puts continue to be popular in the stock's options pits, as Chesapeake Energy Corporation's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.46 sits in the 85th percentile of its annual range. However, traders anticipating a negative post-earnings reaction have reason to be wary -- in the session following its last four earnings reports, CHK has advanced an average of 1.7%, including a 6.9% gain this past November. Short-term speculators are paying below-average prices for their bets on the stock, as its Schaeffer's Volatility Index (SVI) of 41% sits in the 30th percentile of all similar readings taken over the past year.

  • On the other hand, LOW has been a technical juggernaut, with the shares notching a fresh all-time high of $75.82 earlier today -- thanks to a halo lift from Home Depot Inc (NYSE:HD) -- but was last seen 0.9% higher at $74.39, bringing its year-over-year gain to 54.6%. Not surprisingly, calls are more popular than usual in the options pits, with Lowe's Companies, Inc.'s 10-day ISE/CBOE/PHLX call/put volume ratio of 1.87 sitting in the 76th percentile of its annual range. Meanwhile, in the session following its last eight earnings releases, the shares of LOW have gained an average of 1.5%. Premium on the equity's near-term options is currently inflated, as its SVI of 27% sits in the 73rd percentile of its annual range.

  • The shares of SODA are rebounding today, up nearly 4% to reach $18.47, after hitting an all-time low of $17.70 just yesterday. Year-over-year, Sodastream International Ltd is down about 52.8%. In the stock's options pits, put activity has rarely been this predominate among short-term traders, as SODA's Schaeffer's put/call open interest ratio (SOIR) of 2.56 sits in the 98th percentile of its annual range. Meanwhile, in the session following its last eight earnings reports, SODA has moved an average of 5.6%. Traders are paying above-average prices for their near-term bets on the stock, as its SVI of 76% rests higher than three-fourths of all similar readings taken over the past year.
 

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