Bull Note Lifts Verizon Stock Before Earnings

Call buying has been extremely popular on Verizon

Apr 23, 2018 at 9:29 AM
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As the telecom company prepares to report earnings before the open tomorrow, Tuesday, April 24, Verizon Communications Inc. (NYSE:VZ) just received its second analyst upgrade in the past month. Barclays this morning lifted its outlook on VZ shares to "overweight" from "equal weight" and set a $56 price target, suggesting unwarranted concerns have made the stock too cheap. As such, the Dow component is pointed 1.2% higher in pre-market trading, after closing Friday at $47.90.

Bulls will be hoping tomorrow's earnings release will help the equity overcome recent congestion in the $48-$50 region. Not only did this area act as resistance from August to October last year, but it's also home to the 200-day moving average. Overall, the shares have so far shed almost 10% in 2018.

Daily VZ Chart with 200 MA

As for the blue chip's earnings history, the day after earnings has often produced only muted stock moves. Specifically, the shares have swung 2.7% the day after earnings on average, going back two years. Following the company's earnings release a year ago the shares slipped 1.1%. This time around, though, implied volatility data is pricing in a 4.8% move for tomorrow's session.

And ahead of the event, sentiment has been bullish in the options pits. In fact, the 10-day call/put volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands at 4.10, showing call buying has quadrupled put buying in the past two weeks. Plus, this reading ranks in the 87th annual percentile, so such a preference for calls over puts is highly unusual.

 

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