Earnings Preview: Goodrich Petroleum Corporation, Isis Pharmaceuticals, Inc., and JinkoSolar Holding Co., Ltd.

Analyzing recent option activity on Goodrich Petroleum Corporation (GDP), ISIS Pharmaceuticals, Inc. (ISIS), and JinkoSolar Holding Co., Ltd. (JKS)

Feb 26, 2015 at 1:35 PM
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Among the stocks gearing up to report earnings in the next two trading days are oil-and-gas firm Goodrich Petroleum Corporation (NYSE:GDP), drugmaker ISIS Pharmaceuticals, Inc. (NASDAQ:ISIS), and alternative energy issue JinkoSolar Holding Co., Ltd. (NYSE:JKS). Below, we'll break down how options traders are positioning themselves, and how much speculators are willing to pay for their bets on GDP, ISIS, and JKS.

  • GDP, which will release its fourth-quarter earnings report tomorrow morning, has been a technical laggard, with the shares down 65.6% year-over-year -- including a 5.5% drop so far today amid a resumed downtrend in oil -- to reach $4.45. Meanwhile, put activity in the equity's short-term options pits is nearing an annual peak, as Goodrich Petroleum Corporation's Schaeffer's put/call open interest ratio (SOIR) of 0.81 sits just 2 percentage points away from the highest reading taken over the past year. What's more, short interest accounts for over half of the equity's available float. Traders betting on additional downside for GDP have history on their side -- in the session following its last eight earnings reports, the shares of GDP have fallen an average of 4.2%. Traders are paying relatively cheap prices for their near-term bets on the stock, as its Schaeffer's Volatility Index (SVI) of 108% sits in the 36th percentile of all similar readings taken over the past year.

  • ISIS, which will also report fourth-quarter earnings tomorrow morning, has been sliding over the past month, with the shares down over 10.3% since notching an all-time high of $75.24 on Jan. 13 to hit $67.47. Accordingly, bearish sentiment in the options pits is ramping up, as ISIS Pharmaceuticals, Inc.'s 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.47 sits in the 80th percentile of its annual range. Additionally, in the session following its last four earnings reports, ISIS has lost an average of 2.8%, including a 9.5% drop in February of last year. Near-term options for the security are available for bottom-of-the-barrel prices, as its SVI of 56% sits in the 13th percentile of its annual range.

  • Since hitting an annual low of $16.10 on Jan. 20, JKS has been in recovery mode, with the shares advancing 35.7% to reach $21.84. In the options pits, put activity has been extremely prevalent ahead Monday morning's scheduled fourth-quarter earnings release. Specifically, JinkoSolar Holding Co., Ltd.'s SOIR of 1.68 sits in the 99th percentile of its annual range, showing that short-term speculators have rarely been this put-skewed over the past year. Meanwhile, in the session following its last four earnings reports, JKS has lost an average of 3.4%, with the equity failing to have a positive post-earnings session since Nov. 18, 2013. Historically speaking, speculators are paying inexpensive prices for their bets on the stock, as its SVI of 67% sits in the 28th percentile of all similar readings taken over the past year.
 

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