Pre-Earnings Call Sellers Swoop In on VeriFone Systems Inc (PAY)

VeriFone Systems Inc's January 2015 36-strike call is being sold to open today

by Karee Venema

Published on Dec 15, 2014 at 2:06 PM
Updated on Jun 24, 2020 at 10:16 AM

It's a busy day in VeriFone Systems Inc's (NYSE:PAY) options pits, as last-minute traders line up their bets ahead of the company's after-the-close quarterly earnings report. Specifically, 26,000 contracts have changed hands, 17 times what's typically seen at this point in the day.

Drilling down, the bulk of the action is centered at PAY's January 2015 36-strike call, where speculators appear to be selling to open the contracts for a volume-weighted average price of $0.75. This is the most the traders stand to gain, should PAY remain south of the strike through January options expiration. However, there could be an ulterior motive for today's call selling, with traders hoping to capitalize on a volatility crush in the wake of tonight's scheduled announcement.

On the charts, VeriFone Systems Inc (NYSE:PAY) has put in a strong showing over the past year, tacking on more than 32% to trade at $33.02. Assisting the stock in its trek higher has been its 50-week moving average, and this trendline was key in containing PAY's last two pullbacks. The security could be poised to bounce from here after the firm unveils its fiscal fourth-quarter results tonight, considering PAY has averaged a single-session post-earnings gain of 3.5% following its last four turns under the earnings spotlight.

Daily Chart of PAY Since December 2013 With 50-Day Moving Average

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