Options Skeptics Assail Electronic Arts Inc. (EA) Ahead of Earnings

Electronic Arts Inc. (EA) will report earnings tomorrow night

Oct 31, 2016 at 2:08 PM
facebook X logo linkedin

Electronic Arts Inc. (NASDAQ:EA) has hit a snag ahead of the video game maker's earnings report tomorrow night. The shares are down 2.2% at $77.71, and it appears one group of options traders is betting against a short-term EA breakout.

Diving right in, EA calls are being exchanged at 1.7 times the usual intraday clip, and easily outstripping puts. However, not every call trader is necessarily bullish. The stock's most active option overall is the weekly 11/4 83-strike call, where speculators are seemingly selling to open positions. In other words, these traders think $83 will act as a ceiling through week's end, when the series expires.

This wouldn't be all that unusual, either. During the past two weeks across the major options exchanges, EA calls have been bought to open and sold to open at roughly the same rate -- 8,087 contracts to 8,149.

However, this skepticism is a bit surprising, in light of the stock's historical post-earnings success. In five of the past eight quarters, the shares have gained in the session following the company's earnings report. This includes the last two quarters, when EA popped 2.4% after its Aug 3. release and an even more impressive 13.7% after its May 11 report.

Speaking of skepticism, a build in negative sentiment is clear from mounting levels of short interest. During the most recent reporting period, short interest on EA climbed 8.2% to nearly 20 million shares. At the stock's average trading rate, it would take eight sessions to cover these positions.

Suffice it to say, if Electronic Arts Inc. (NASDAQ:EA) can top earnings expectations tomorrow night, a short-squeeze situation could send the shares upward. This could help the stock build on its already impressive 13% year-to-date lead, and fuel a run past EA's Oct. 4 all-time high of $86.07.

Schaeffer's Expiration Week Countdown subscribers just made 153% GAINS on Electronic Arts (EA) calls! Sign up now for a trial subscription.

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI