Earnings Preview: Accenture, ConAgra Foods, Lululemon

Analyzing recent option activity on Accenture Plc (ACN), ConAgra Foods Inc (CAG), and Lululemon Athletica inc. (LULU)

Mar 25, 2015 at 12:26 PM
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Among the stocks gearing up to report earnings tomorrow morning are business support specialist Accenture Plc (NYSE:ACN), food concern ConAgra Foods Inc (NYSE:CAG), and athletic apparel maker Lululemon Athletica inc. (NASDAQ:LULU). Below, we'll break down how options traders are positioning themselves, and how much speculators are willing to pay for their bets on ACN, CAG, and LULU.

  • ACN has been edging it way upwards, with the shares up 6.6% year-over-year to hit $88.46. In fact, the shares of Accenture plc notched a fresh all-time high of $92.18 on March 5. Despite ACN's positive price action, sentiment in the options pits has been bearish. Over the last 50 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 2.48 puts have been bought to open for every call, which is a higher ratio than 97% of all equivalent readings taken over the past year. Meanwhile, in the session immediately following its last two earnings reports, ACN has gained an average of 3%. Near-term options are available for historically expensive prices, as the stock's 30-day at-the-money (ATM) implied volatility (IV) of 25.1% is the highest such reading taken over the past 12 months.

  • CAG has been trending downwards, with the shares off 6.8% since hitting a 17-year high of $37.46 in December, to linger near $34.92. Accordingly, put activity has been prominent in the options pits, as ConAgra Foods Inc's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.20 reads in the 80th percentile of its annual range. Traders gambling on post-earnings downside for the equity are going against history -- in the session immediately following its last four earnings reports, CAG has gained an average of 1.4%. Short-term options are available for relatively middling prices, as CAG's Schaeffer's Volatility Index (SVI) of 23% sits in the 56th percentile of all equivalent readings take over the past year.

  • On the other hand, LULU has been a technical outperformer, with the shares up 28.2% year-over-year to hit $61.83. However, sentiment in the options pits has been bearish, as Lululemon Athletica inc.'s 10-day ISE/CBOE/PHLX put/call volume ratio of 0.73 stands higher than 87% of all similar readings taken over the past 12 months. Looking elsewhere, in the session immediately following its last four earnings reports, LULU has gained an average of 3.3%. Traders are paying historically high prices for their near-term bets on the equity, as LULU's 30-day ATM IV of 46.2% sits in the 82nd percentile of its annual range.
 

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