Comcast Options Bulls Move In After Blowout Earnings

Comcast's effective COVID-19 response resonated with customers

by Fernanda Horner

Published on Jul 30, 2020 at 11:07 AM

The shares of Comcast Corporation (NASDAQ: CMCSA) are up 0.3% at $44.03 this morning, so far immune to the broad market selloff today. This is likely because the telecommunications conglomerate reported fiscal second-quarter profits of $0.69 per share on $23.72 billion, much higher than Wall Street's estimates of $0.55 on $23.57 billion. The company attributed the strong results to a growing number of broadband subscribers, as well as an effective COVID-19 response that resonated with customers.

On the charts, Comcast stock has been working to recover from its late-March two-year trough near the $31 level. And while CMCSA has received support from its 10-day moving average over the last couple of weeks, it still has to reclaim its year-to-date breakeven level, and a ways to go before reaching its pre-pandemic high of $47.74 on January 17. Nonetheless, the equity is up 13.1% quarter-to-date.

Analysts were optimistic toward Comcast stock coming into today, with 12 of the 19 in coverage sporting a "buy" or better rating, while the remaining seven carried a tepid "hold." Meanwhile, the equity's 12-month consensus price target of $45.60 is a 4.8% premium to current levels.  

That sentiment is not echoed in the options pits, where puts are preferred. CMCSA sports a 10-day put/call volume ratio of 1.18 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 92nd percentile of its annual range. This suggests a healthier-than-usual appetite for bearish bets over the past two weeks.

Today's options activity shows calls overwhelming puts, however. So far, 4,084 calls have crossed the tape, which is more than twice the amount of puts traded. Most popular is the monthly August 47 call, followed by the weekly 07/31 44-strike call. 


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