Earnings Preview: BlackBerry Limited, Carnival Corporation, and GameStop Corp.

Analyzing recent option activity on BlackBerry Ltd (BBRY), Carnival Corp (CCL), and GameStop Corp. (GME)

by Griffin Kruse

Published on Mar 26, 2015 at 1:03 PM
Updated on Apr 20, 2015 at 5:32 PM

Among the stocks gearing up to report earnings are mobile device concern BlackBerry Ltd (NASDAQ:BBRY), cruise line Carnival Corp (NYSE:CCL), and video game retailer GameStop Corp. (NYSE:GME). Below, we'll break down how options traders are positioning themselves, and how much speculators are willing to pay for their bets on BBRY, CCL, and GME.

  • Nomura cut its price target on BBRY to $9.70 from $10.30 ahead of tomorrow morning's earnings release, sending the shares down 0.4% to hit $9.24. Short sellers have been active, as nearly 20% of BlackBerry Ltd's available float is sold short, which would take about 8.5 sessions to buy back, at average trading volumes. Meanwhile, in the session immediately following its last six earnings reports, BBRY has gained an average of 3.8%, including a 9.7% bump last June. Should the stock once again enjoy post-earnings upside, a short squeeze could help BBRY rebound off support in the $9 region. Near-term options are available for historically expensive prices, as the stock's 30-day at-the-money (ATM) implied volatility (IV) of 64.2% stands in the 93rd percentile of its annual range.

  • CCL has been in recovery mode, with the shares up roughly 34.6% since notching an annual low of $33.11 on Oct. 15 to linger near $44.56. However, sentiment in the options pits has been bearish ahead of tomorrow morning's earnings release, as Carnival Corp's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 2.29 ranks higher than 96% of all equivalent readings taken over the past year. Traders banking on a post-earnings slide have history on their side -- in the session immediately following its last four earnings reports, CCL has shed an average of 1.7%. Short-term options are available for middling prices, as CCL's Schaeffer's Volatility Index (SVI) of 32% sits in the 47th percentile of all similar readings taken over the last 12 months..

  • GME has been trending upwards as well, with the shares gaining about 23.7% from their Jan. 12 annual low of $31.69 to reach $39.19. Today, though, the shares are down about 1.6% ahead of tonight's earnings release. Sentiment in the options pits has been bullish, as GameStop Corp.'s 10-day ISE/CBOE/PHLX call/put volume ratio of 2.54 stands higher than 85% of all equivalent readings taken over the past year. Nearly 45% of GME's available float is sold short, and it would take traders over 47 sessions to cover these bets, at average daily volumes. Looking elsewhere, in the session immediately following its last four earnings reports, GME has lost an average of 1.7%. Speculators are paying above-average prices for their bets on the security, as GME's 30-day ATM IV of 47.6% reads in the 76th percentile of its annual range.

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