Option Bears Swarm Corning Incorporated (GLW) Ahead of Earnings

Put volume on GLW is surging before Tuesday's earning report

by Kirra Fedyszyn

Published on Jan 25, 2016 at 11:35 AM
Updated on Jun 24, 2020 at 10:16 AM

Ahead of tomorrow morning's quarterly earnings report, Gorilla Glass maker Corning Incorporated (NYSE:GLW) is attracting an abundance of bears to the option pits. The stock is trading 1.2% lower at $16.90 this morning, as the broader market pulls back.

However, negative price action is nothing new for GLW. The shares are off 7.5% so far in 2016, and 29.3% lower year-over-year. Since late March 2015, the stock has been unsuccessfully battling resistance from its 80-day, 160-day, and 200-day moving averages.

Today, GLW puts are crossing the tape at five times their typical intraday rate, with about 13,000 traded so far -- outnumbering calls by nearly 4-to-1. Buy-to-open action is happening at the February 17 put, where more than 9,200 contracts have already traded.

Looking at sentiment more broadly, today's appetite for puts is a change of pace for GLW option buyers. In the past 50 trading days, the stock has amassed a call/put volume ratio of 2.81 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) -- meaning nearly three calls were bought to open for each put during this period. Moreover, this ratio is higher than 75% of all comparable readings from the past year.

Short interest on the equity fell by more than 25% during the last two reporting periods, but the shares failed to benefit from this influx of buying pressure. Just under 5% of GLW's float remains dedicated to short interest, representing 5.2 times the stock's average daily volume.

But despite GLW's weak performance over the past year, four analysts still rate the stock a "buy" or better, and its average 12-month price target of $19.78 is at a level not seen since last July. Should tomorrow's earnings report fail to impress -- or should a post-earnings pop be thwarted by looming technical resistance -- an unwinding of bullish sentiment among analysts or a renewed push by short sellers could pressure Corning Incorporated (NYSE:GLW) toward new multi-year lows.

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