Short-Term Puts Popular On Ambarella, Inc. (AMBA) Ahead of Earnings

The options market is price in a 7.6% post-earnings move for Ambarella Inc (NASDAQ:AMBA)

by Josh Selway

Published on Jun 2, 2015 at 10:48 AM

With the company slated to announce first-quarter results after today's close, Ambarella Inc (NASDAQ:AMBA) was last seen 2.7% lower at $91.99. Looking back, though, the shares have seen monstrous gains, almost tripling in value over the past 12 months, and touching a record high of $95.67 just yesterday. Even so, traders haven't exactly been rushing to grab the stock's calls.

AMBA's Schaffer's put/call open interest ratio (SOIR) stands at 1.12, meaning put open interest outnumbers call open interest among options expiring in three months or less. Moreover, this reading is higher than 69% of similar marks from the past year, pointing to a stronger-than-usual preference for short-term puts over calls.

For now, the stock's near-term at-the-money straddle is pricing in a 7.6% swing in either direction. This would be a larger after-earnings move than AMBA is used to, as it's averaged a 4.3% shift in the session following its last eight trips to the earnings confessional -- six of which have been to the upside.

Additionally, for those looking to purchase the equity's options ahead of tonight's event, front-month contracts are fairly priced, from a volatility standpoint. This, based on AMBA's Schaeffer's Volatility Index (SVI) of 58%, which lands in the 51st percentile of its annual range. 

A look at the brokerage bunch shows mixed feelings. Half of those covering Ambarella Inc (NASDAQ:AMBA) say it's a "strong buy," while the other half says it's a "hold" or worse. It's also worth noting that the equity's 14-day Relative Strength Index (RSI) is docked at 78, well into overbought territory. As such, some of the recent put activity -- specifically, those purchasing out-of-the-money strikes -- could be a result of shareholders protecting paper profits against an unexpected pullback.


A Schaeffer's exclusive

6 Sectors for Summer

Access your FREE insider report before it's too late!


  
 

Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


Research Exposes Shortcut to Stock Market Wins
A simple way to stop picking losers, and start cashing in like Wall Street's elite.
Google Postpones Android Reveal, "Now is Not the Time to Celebrate"
"Now is not the time to celebrate," Google said in a message on its website
ZNGA Zooms to 8-Year High on Billion-Dollar Deal
ZNGA is planning to buy Peak for $1.8 billion
Huge New Legal Marijuana Market Has Shortage Crisis
250 million Europeans have access to medical marijuana. There's already a shortage....