Roku Earnings Reaction Catches Options Traders Off-Guard

Roku's weekly 11/8 185-strike call has been popular in recent weeks

by Karee Venema

Published on Nov 7, 2019 at 9:13 AM

Roku Inc (NASDAQ:ROKU) said its third-quarter loss arrived at 22 cents per share -- slimmer than the 28 cents per-share loss analysts were expecting. The company's quarterly revenue of $260.9 million also exceeded the consensus estimate, though Roku said operating expenses for the three-month period surged 60% to $260.9 million. This last number is what some are citing as the catalyst for a pre-market ROKU stock sell-off, with the shares down 14.7% in electronic trading.

Heading into today's trading, the streaming stock had been sailing up the charts since an early October bounce off its 120-day moving average. The shares topped out at a six-week high of $151.48 on Oct. 30, before easing back to last night's close at $141.05. Should today's pre-market price action hold, Roku stock will open the session near the $120 per-share mark.

Analysts have been quick to chime in following Roku's earnings report. While Susquehanna and RBC raised their ROKU price targets to $150 and $160, respectively, Guggenheim lowered its target price by $20 to $150.

Elsewhere, Loop Capital reiterated its "sell" rating and $80 price target on the equity, citing concerns over "substantial competition" and tariffs. Pivotal Research also maintained its "sell" rating and $60 price target, saying the company's fourth-quarter guidance was "surprisingly mixed," even with the upcoming launch of Disney+.

Today's expected spiral could catch some options bulls off guard. Roku's weekly 11/8 185-strike call saw a notable rise in open interest over the last two weeks, and data from Trade-Alert points to buy-to-open activity here. The good news for options buyers is the most they stand to lose is the initial premium paid.


a schaeffer's exclusive

PLAY TRENDS LIKE A PRO!

5 tips to leverage profits in this FREE insider report!


 
 

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


The IRS Loopholes Retirees Need to Know
Click to continue to advertiser's site.
Options Traders Blast SDC amd GOOS Stocks
SDC and GOOS options volume has ramped up today
Alibaba Stock Drops Amid Hong Kong IPO Buzz
Alibaba expects to raise up to $15 billion in its Hong Kong IPO
IRA/401K Investment Guide: 2019 Stock Market Crash
Use gold to protect any IRA, 401(k), or retirement account from a looming financial crisis.