Options Traders Nail AKAM Stock's Post-Earnings Move

Call buying dominated in the weeks leading up to earnings

Feb 7, 2018 at 9:45 AM
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Options traders are cheering well-received earnings from Akamai Technologies, Inc. (NASDAQ:AKAM), with shares of the cloud stock up 7.2% this morning at $68.25. Call buying was extremely popular leading up to the event, evidenced by a 10-day call/put volume ratio of 4.63 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), a reading that ranks in the high 88th annual percentile.

Looking closer, calls accounted for the four largest increases in open interest during the past two weeks, with the weekly 2/9 70-strike call leading the way. The 66-strike call from the same series was also popular, as were the traditional front-month February 67 and 70 calls. All of these contracts saw buy-to-open activity, indicating traders were betting on an upside move from AKAM stock.

Analysts, meanwhile, are jumping on the bullish bandwagon this morning. A flurry of price-target hikes have come through since yesterday's close, with the highest mark of $84 coming from Craig-Hallum. Still, 11 of the 16 brokerage firms tracking the security say it's a "hold" or worse, so there's seemingly plenty of room for more bullish analyst attention.

Turning to the charts, the $68-$72 range has acted as technical resistance for Akamai Technologies' past two breakout attempts, but more recently the tech stock has enjoyed the support of its fast-rising 50-day moving average. Even before today, the security was up almost 35% in the past six months alone, thanks in part to a vote of confidence from the hedge fund community in December.

akam stock price

Of course, big moves from the equity is nothing new. The shares have made double-digit percentage moves the day after earnings six times in the past two years. This knack for volatility is further confirmed by AKAM's Schaeffer's Volatility Scorecard (SVS) of 89, showing it's regularly made bigger moves than the options market has priced in over the past year.
 

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