Earnings Preview: ANN INC., FXCM Inc., and Molycorp, Inc.

Analyzing recent option activity on Ann Inc (ANN), FXCM Inc (FXCM), and Molycorp Inc (MCP)

Mar 12, 2015 at 1:01 PM
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Among the stocks gearing up to report earnings are fashion specialist Ann Inc (NYSE:ANN), forex issue FXCM Inc (NYSE:FXCM), and rare earths concern Molycorp Inc (NYSE:MCP). Below, we'll break down how options traders are positioning themselves, and how much speculators are willing to pay for their bets on ANN, FXCM, and MCP.

  • ANN has been trending upwards, with the shares advancing 18.7% from their Jan. 21 annual low of $31.69 to hit $37.62, including a 1% gain today. Not surprisingly, sentiment in the options pits is at an optimistic peak ahead of tomorrow's fourth-quarter earnings release, as Ann Inc's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 3.29 is the highest reading of its kind taken over the past year. Meanwhile, in the session immediately following its last four earnings reports, ANN has gained an average of 2%. Traders are paying historically expensive prices for their short-term bets on the equity, as its Schaeffer's Volatility Index (SVI) of 67% sits just 4 percentage points away from an annual high.

  • FXCM has been in recovery mode as well, with the shares up 68.8% from their Jan. 20 all-time low of $1.28 -- following a currency decision at the Swiss National Bank -- to hit $2.16, including a 1.7% gain today. Elsewhere, short-term calls have been preferred over puts, as FXCM Inc's Schaeffer's put/call open interest ratio (SOIR) of 0.21 sits in the 17th percentile of its annual range. Traders hoping for post-earnings upside have history against them, though -- in the session immediately following the company's last four earnings reports, FXCM has shed an average of 2.5%, including a 5.1% dip in November. Near-term options for FXCM are available for fair prices ahead of tonight's earnings report, as its SVI of 113% sits in the 48th percentile of its annual range.

  • The shares of MCP are down 21.6% year-to-date to hit $0.69, including a 9.5% loss today. What's more, the equity has fallen 86.8% since hitting an annual high of $5.22 last March. Not surprisingly, short-term puts are popular in the options pits, as Molycorp Inc's SOIR of 1.41 sits in the 85th percentile of all similar readings taken over the past year. Simply stated, traders are more put-skewed than usual, when looking at options with a shelf-life of three months or less. Additionally, short interest accounts for 30% of MCP's available float, representing 9.5 times the equity's average trading volume. Meanwhile, in the session immediately following its last four earnings reports, the security has lost an average of 4%. MCP is scheduled to report fourth-quarter earnings Monday night.
 

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