Options Bulls Blast Halliburton Stock After Earnings Beat

A post-earnings volatility crush has made premium affordable

Deputy Editor
Oct 19, 2020 at 10:12 AM
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Oil service stock Halliburton Company (NYSE:HAL) is up 1.9% at $12.48 this morning, after the company reported fiscal third-quarter earnings that bested Wall Street's forecasts. Gains are capped though, after revenue missed its mark, with lower oil prices taking their toll on demand for Halliburton's services.

Much like the oil sector in general, HAL has experienced an extremely tumultuous year. While the stock has tripled off its nearly 20-year low of $4.25, it remains down 48.7% in 2020. Meanwhile, the shares' 120-day moving average has acted as a stiff layer of resistance since mid-September.

Calls are flying off the shelves today. In just the first hour of trading, over 8,000 calls have changed hands, volume running at three times the average intraday amount. Leading the charge is the weekly 10/23 12.50-strike call, but there are also new positions being opened at the November 12.50 call.

Those wanting to get in on the equity's rise may want to consider options. Thanks to a volatility crush, traders are pricing in relatively low volatility expectations at the moment, per the stock's Schaeffer's Volatility Index (SVI) of 65%, which sits higher than just 17% of all other annual readings.

Plus, HAL's Schaeffer's Volatility Scorecard (SVS) stands at 94 out of a possible 100. In other words, the security has tended to make outsized moves over the last year, compared to what the options market had priced in -- a potential boon to premium buyers.


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