Bullish Bias Builds Among Analysts, Options Traders Before Adobe Earnings

Call buyers have targeted the $175 level

Dec 11, 2017 at 9:54 AM
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Software company Adobe Systems Incorporated (NASDAQ:ADBE) is set to report earnings after the close on Thursday, and bullish expectations are building ahead of the event. Just this morning, for example, RBC raised its price target to $179 from $177, helping ADBE stock pick up 0.4% to trade at $174.27. Most analysts are already very bullish, with 19 of 23 handing out "strong buy" ratings, and options traders in recent weeks have taken an upbeat approach, too. 

Specifically, the security has a 10-day call/put volume ratio of 1.54 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks in the 71st annual percentile. This means call buying has been more popular than normal.

During this time frame, the largest increase in open interest occurred at the January 175 call, where more than 2,200 positions were added. Data from the major options exchanges shows mostly buy-to-open activity here, so many are speculating on Adobe stock rising above $175 in the weeks ahead.

ADBE shares touched a record high of $186.27 on Nov. 28, only to pull back to the supportive 50- and 80-day moving averages. Overall, the equity has added roughly 69% in 2017, but it'll need to avoid another post-earnings pullback to add to this lead. That is, Adobe fell 4.2% in the session after earnings following the company's last report in September.

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