What Options Traders Are Expecting for AN After Earnings

There is still plenty of pessimism surrounding AN

Deputy Editor
Jul 19, 2021 at 10:48 AM
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AutoNation, Inc. (NYSE:AN) announced second-quarter earnings of $4.83 per share ahead of the open this morning, which is much better than Wall Street's expected $2.81. AutoNation's revenue also beat estimates, and the auto retailer expects the recent strong demand for cars to continue into next year. At last check, AutoNation stock was up 1.4% to trade at $103.98.  

Since early May, AutoNation stock has been battling pressure at the $107 level -- home to last week's July 14 record high of $107.67. During this time, however, long-term support at the ascending 120-day moving average caught AutoNation stock's pullback below the $90 level. 

Despite the recent highs, the brokerage bunch is hesitant on AutoNation stock. Of the 10 analysts in coverage, only three carry a "strong buy" rating, while the remaining seven sport a "hold" or worse.

Meanwhile, short interest has soared 62.3% during the two most recent reporting periods, now making up 8.3% of the AN's available float. In other words, it would take over a week to buy back these bearish bets at AutoNation stock's average pace of trading. 

The options pits have been more bearish than usual. AN's 10-day put/call volume ratio of 1.65 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than 91% of readings from the past year. This indicates long puts are being picked up at a much faster-than-usual rate on AutoNation.

A look at today's trading activity shows 1,393 calls and 879 puts across the tape so far. Most popular is the August 110 call, where it  looks like positions are being sold to open. This suggests these traders are expecting the $110 level to hold as a ceiling for AutoNation stock until these contracts expire on Aug. 20. 

 

 

 

 

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