Earnings Preview: Cree, Under Armour, and Yahoo!

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

Apr 20, 2015 at 12:29 PM
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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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