Earnings Preview: Conn's, Dangdang, Vitae Pharma

Analyzing recent option activity on CONN'S, Inc. (CONN), E Commerce China Dangdang Inc (ADR) (DANG), and Vitae Pharmaceuticals Inc (VTAE)

Mar 30, 2015 at 2:28 PM
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Among the stocks gearing up to report earnings tomorrow are consumer products concern CONN'S, Inc. (NASDAQ:CONN), Beijing-based Internet merchant E Commerce China Dangdang Inc (ADR) (NYSE:DANG), and biotech firm Vitae Pharmaceuticals Inc (NASDAQ:VTAE). Below, we'll gauge the pre-earnings temperature of CONN, DANG, and VTAE.

  • CONN has been in recovery mode, with the shares up 103% since notching a three-year low of $14.02 on Dec. 16. Today, however, the equity is 4.4% lower to linger near $28.47. Some traders see downside in CONN's future, as nearly 36% of the stock's available float is sold short, which would take about 13 sessions to cover, at average trading volumes. Meanwhile, in the session immediately following its last two earnings reports, the shares have shed an average of 35.7%. Short-term options for CONN are available for historically inexpensive prices, as its Schaeffer's Volatility Index (SVI) of 105% sits in the 27th percentile of its annual range.

  • On the other hand, DANG has been a technical laggard, with the shares down about 50% from their Aug. 13 annual high of $16.42 to hit $8.25. Accordingly, sentiment in the options pits has been bearish, as E Commerce China Dangdang Inc's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.21 ranks in the 78th percentile of its annual range. Traders anticipating post-earnings downside for the security have history on their side -- in the session immediately following its last four earnings reports, DANG has lost an average of 9.1%, including a 14.5% drop last May. Near-term options for the security are available for relatively attractive prices, as its SVI of 73% stands in the 42nd percentile of all equivalent readings taken over the past year.

  • VTAE has been sliding as well, with the shares falling 51.8% from their Dec. 11 all-time high of $23.35 to trade around $11.25. However, the brokerage bunch is still universally optimistic on the security, as 100% of covering analysts rate it a "strong buy." Looking elsewhere, in the session immediately following its last trip to the earnings confessional on Nov.12, Vitae Pharmaceuticals Inc dropped 7.4%. Short sellers are apparently gambling on an extended slump for VTAE, as short interest grew 22.5% during the last reporting period.

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