Earnings Preview: Foot Locker, Inc., Qihoo 360 Technology Co. Ltd., and Staples, Inc.

Analyzing recent option activity on Foot Locker, Inc. (FL), Qihoo 360 Technology Co Ltd (QIHU), and Staples, Inc. (SPLS)

Mar 5, 2015 at 1:35 PM
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Among the stocks gearing up to report earnings are footwear retailer Foot Locker, Inc. (NYSE:FL), Chinese Internet provider Qihoo 360 Technology Co Ltd (NYSE:QIHU), and office supplies vendor Staples, Inc. (NASDAQ:SPLS). Below, we'll break down how options traders are positioning themselves, and how much speculators are willing to pay for their bets on FL, QIHU, and SPLS.

  • Over the past twelve months, FL has advanced on the charts at a decent clip, with the shares riding their 10-month moving average to an impressive 32.5% year-over-year gain. However, since notching an all-time high of $59.19 on Nov. 21, the shares have shed about 4.3% to hit $56.63, including a 1.5% dip today. Accordingly, bearish sentiment in Foot Locker, Inc.'s options pits is ramping up ahead of tomorrow morning's earnings release. Drilling down, FL's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.62 sits in the 70th percentile of its annual range. Meanwhile, in the session immediately following its last four earnings reports, FL has gained an average of 2.3%, including an 8.8% boost last March. Traders are paying bottom-of-the-barrel prices for their short-term bets on the equity, as its Schaeffer's Volatility Index (SVI) of 43% sits just 5 percentage points away from the lowest similar reading taken over the past year.

  • On the other hand, QIHU has been a technical laggard, with the shares down about 18.8% year-to-date to hit $46.52. Not surprisingly, sentiment in the options pits has hit a pessimistic peak ahead of Qihoo 360 Technology Co Ltd's upcoming earnings release, scheduled for Monday night. Specifically, QIHU's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.93 is the highest such reading taken over the past year. However, in the session immediately following its last eight earnings reports, QIHU has advanced an average of 0.4%. Near-term options on the security are currently available for above-average prices, as its SVI of 69% sits in the 74th percentile of its annual range.

  • 2015 has been an interesting year for SPLS so far, as news of a merger with Office Depot Inc (NASDAQ:ODP) propelled the shares to a three-year high of $19.40 on Feb. 3. Since then, the shares have retreated 14.6% to hit $16.56, and yesterday activist investor Starboard Value LP requested that Staples, Inc. "improve" the makeup of its board in order to finish its acquisition of ODP. Sentiment in the stock's options pits is bearish, as SPLS' 10-day ISE/CBOE/PHLX put/call volume ratio of 4.52 sits in the 95th percentile of its annual range. Traders hoping for additional downside after tomorrow morning's earnings release have history on their side -- in the session immediately following its last four earnings reports, SPLS has shed an average of 5.3%. Short-term options for the stock are currently available for historically fair prices, as its SVI of 38% sits in the 43rd percentile of all similar readings taken over the past year.
 

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