Earnings Preview: Cree, Inc., Under Armour, Inc., and Yahoo! Inc.

Analyzing recent option activity on Cree, Inc. (CREE), Under Armour Inc (UA), and Yahoo! Inc. (YHOO)

by Griffin Kruse

Published on Apr 20, 2015 at 12:29 PM
Updated on Apr 20, 2015 at 5:32 PM

Among the stocks gearing up to report earnings tomorrow are LED specialist Cree, Inc. (NASDAQ:CREE), athletic apparel maker Under Armour Inc (NYSE:UA), and search engine giant Yahoo! Inc. (NASDAQ:YHOO). Below, we'll gauge the pre-earnings temperature of CREE, UA, and YHOO.

  • CREE has been a technical underperformer, with the shares down nearly 40% year-over-year to linger near $34.97. Accordingly, puts have been prominent in the options pits, as Cree, Inc.'s 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX ) put/call volume ratio of 0.93 is higher than 73% of all similar readings from the past year. On the earnings front, CREE has been abysmal over the past year, losing an average of 8.5% in the session immediately following its last four earnings reports -- including a 17.7% plummet in October. Traders are paying historically middling prices for their short-term bets on the equity, as its Schaeffer's Volatility Index (SVI) of 52% ranks in the 54th percentile of its annual range.

  • On the other hand, UA has been a technical beast, with the shares up 27.3% year-to-date to hit $86.40 -- and earlier touching an all-time high of $86.68. Not surprisingly, traders have favored Under Armour Inc calls over puts, as UA's 50-day ISE/CBOE/PHLX call/put volume ratio of 2.52 stands in the 98th percentile of its annual range. Traders anticipating post-earnings upside for the stock have history on their side -- in the session immediately following its last four earnings reports, UA has gained an average of 1.1%. Short-term options are available for relatively fair prices, as UA's SVI of 38% is higher than 48% of all equivalent readings from the past year.

  • The shares of YHOO have slipped recently, down 14.9% from November's 14-year high of $52.62 to hover around $44.80. However, traders have shown a distinct preference for calls over puts in the options pits, as Yahoo! Inc.'s 10-day ISE/CBOE/PHLX call/put volume ratio of 4.57 is higher than 85% of all similar readings taken over the past 12 months. In the session immediately following its last four earnings reports, YHOO's returns have been all over the map, ranging from a 6.3% pop last April to a 5.1% loss in July. Traders are paying historically tame prices for their near-term bets on YHOO, as its SVI of 33% ranks in the 30th percentile of its annual range.

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