Why Brinker Stock is Suffering a Post-Earnings Plunge

Call traders have been blasting the stock recently

Deputy Editor
May 4, 2022 at 10:48 AM
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Brinker International Inc (NYSE:EAT) stock is struggling after the company's fiscal third-quarter results, down 14.7% to trade at $33.67. Though the Burger King parent saw an increase in sales from last quarter, commodity and labor costs took their toll, and Brinker turned in lower-than-expected earnings and revenue while lowering its full-year forecast.

On the charts, EAT now carries an 8% year-to-date deficit, with several long-term moving averages lingering above -- including the 160-day trendline. However, the security appears to have found a floor at the $33 level, which has caught pullbacks in both March and April as well as today.

Meanwhile, options bulls have been blasting Brinker stock. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day call/put volume ratio of 9.28 sits higher than 98% of readings from the past year. Echoing this, EAT's Schaeffer's put/call open interest ratio (SOIR) of 0.22 is higher than just 1% of readings.

Calls are still winning out in the options pits today, with 3,230 calls exchanged so far in comparison to 869 puts. Overall, options volume is running at six times the intraday average after the earnings event, and pacing for the 99th percentile of its annual range. The July 50 call is the most popular, followed by the May 45 call, which also happens to be one of the top open interest positions. It's worth noting, however, that EAT has landed on the Short Sale Restricted (SSR) list today. 

 

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