Earnings Preview: Ambarella, Inc., AutoZone, Inc., and Best Buy Co., Inc.

Analyzing recent option activity on Ambarella Inc (AMBA), AutoZone, Inc. (AZO), and Best Buy Co Inc (BBY)

Mar 2, 2015 at 2:11 PM
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Among the stocks gearing up to report earnings tomorrow are semiconductor issue Ambarella Inc (NASDAQ:AMBA), car parts retailer AutoZone, Inc. (NYSE:AZO), and home electronics retailer Best Buy Co Inc (NYSE:BBY). Below, we'll break down how options traders are positioning themselves, and how much speculators are willing to pay for their bets on AMBA, AZO, and BBY.

  • AMBA, which will release its fourth-quarter earnings report Tuesday night, has been a technical outperformer, with the shares up a staggering 184.5% -- including a 7.1% gain to $61.46 today-- since hitting an annual low of $21.60 on May 9. Accordingly, call activity is popular in Ambarella Inc's options pits, as its 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 2.52 sits higher than four-fifths of all similar readings taken over the past year. Meanwhile, in the session following its last seven earnings reports, the shares of AMBA have gained an average of 1.4%. Traders are paying historically fair prices for their near-term bets on the stock, as its Schaeffer's Volatility Index (SVI) of 60% sits in the 46th percentile of all similar readings taken over the past year.

  • AZO has also been on a hot streak, with the shares advancing 31% from their Oct. 15 yearly low of $491.93 to hit $644.48. In fact, the equity notched an all-time best of $651.95 on Friday. In AutoZone, Inc.'s options pits, bullish sentiment is prevalent ahead of tomorrow morning's fiscal second-quarter earnings release. Specifically, the stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 1.28 sits in the 80th percentile of its annual range. Traders hoping for a positive post-earnings move from AZO have history on their side:- in the session following its last six earnings reports, the stock has added an average of 1.7%, including a 4.3% gain this past December. Historically speaking, short-term speculators are paying expensive prices for their bets on AZO, as its SVI of 22% sits in the 80th percentile of all similar readings from the past year.

  • The shares of BBY have fallen recently, with the stock down about 1% year-to-date to hit $38.58, despite a 1.3% gain today. However, calls are fairly prominent in the options pits, as Best Buy Co Inc's 50-day ISE/CBOE/PHLX call/put volume ratio of 1.91 sits in the 61st percentile of all similar readings taken annually. The company, which will report fourth-quarter earnings tomorrow morning, has not performed well, on average, in the session following its last five earnings reports. Drilling down, the shares have only enjoyed a positive post-earnings trading session twice out of the last five times, shedding an average of about 1.7%. Near-term options for the security are available for below-average prices, as its SVI of 42% sits in the 30th percentile of its annual range.

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