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Put Traders Blast American Express Stock Despite Earnings Beat

AXP's revenue, meanwhile, was below forecasts

Deputy Editor
Jul 24, 2020 at 10:19 AM
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American Express Company (NYSE:AXP) stepped up to the earnings plate today, and the credit card behemoth reported second-quarter earnings that bested Wall Street's estimates. Revenue was a different story though, coming in well below analysts' forecasts as the company sets aside almost $628 million to brace for a slew of potential defaults triggered by the COVID-19 pandemic. As a result, the shares of AXP are down 0.4%, last seen trading at $96.25, having pared steeper losses from the morning. 

On the charts, American Express stock has been trying to dig out of the trenches since hitting a near three-year low of $67 on March 18. The equity was just shy of $116 in early June before being turned away by its 320-day moving average. And while AXP has managed to tack on 16.2% in the last three months,  the stock has still taken a 22.4% year-to-date haircut, with short-term resistance emerging at the round $100 level.

Short-term, the options pits are full of bearish activity. This is per American Express stock's 10-day put/call volume ratio of 0.93 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than 81% of readings in its annual range, meaning puts are being picked up at a quicker-than-usual clip. 

The options pits today are singing a similar tune, with puts handily outpacing calls. So far, 6,000 puts have been ordered up -- six times the intraday average and volume pacing in the highest percentile of its annual range. Most popular today is the weekly 07/24 91-strike put, followed by the weekly 07/31 95-strike put where new positions are being opened.

Now looks to be an affordable time to jump on the options bandwagon, too. American Express stocks's Schaeffer's Volatility Index (SVI) of 40% sits in the 21st percentile of all other readings from the past year -- a boon for premium buyers.

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