Mattel Options Traders Target Rare Earnings Win

Mattel has struggled after earnings in recent years

Oct 22, 2018 at 3:10 PM
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Mattel, Inc. (NASDAQ:MAT) fell out of the gate this morning due to disappointing quarterly results from toymaking peer Hasbro (HAS). However, the stock has since bounced back, adding 0.6% to trade at $14.30, as the company prepares for its own earnings release scheduled for after the close on Thursday, Oct. 25. But even though MAT shares have a rocky post-earnings trading history, options traders are betting bullishly ahead of the event.

Specifically, there's been very unusual activity today at the weekly 11/9 15-strike call, where almost 6,600 contracts have traded, compared to fewer than 300 at the next most popular option. Data gives the impression of buy-to-open activity, which would mean these bulls see Mattel stock rising above $15 over the next two weeks.

As was alluded to earlier, such bullish activity would be betting against a break of the recent post-earnings trend out of MAT. The security has closed in the red the day after earnings in five of the past eight quarters, including a 4.2% drop back in July, and a 8.9% decline this time last year. Overall, the stock has averaged a one-day post-earnings move of 8.4% in the past two years, but this time around the options market is expecting almost twice that move, with traders pricing in a 16.5% swing for Friday's session.

Before today, options activity had been more of what you'd might expect on the equity. That is, data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows put buying has almost doubled call buying during the past 10 days.

On the charts, the security has struggled in 2018, down more than 7%. Meanwhile, the 320-day moving average has acted as a stiff ceiling since June.

mat stock chart


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