AAL

Arista Networks Post-Earnings Plunge Sparks Heavy Options Trading

Put buying was hot on ANET ahead of earnings

Nov 1, 2019 at 10:18 AM
facebook X logo linkedin


Arista Networks Inc (NASDAQ:ANET) unveiled third-quarter adjusted profit of $2.69 per share on $654.4 million in revenue -- more than analysts were expecting. However, the cloud infrastructure specialist said it expects current-quarter revenue to arrive between $540 million and $560 million, less than anticipated, with CEO Jayshree Ullal citing "a sudden softening in Q4 with a specific cloud titan customer," which several analysts are speculating is Facebook (FB).

Against this backdrop, brokerages are blasting the cloud stock with bearish notes this morning. A number of downgrades have already come through, including one to "underweight" from "neutral" at J.P. Morgan Securities, which also slashed its price target to $180 from $290.

In reaction, ANET stock is down 28.8% to trade at $174.50, fresh off a two-year low of $173.31, and headed for its biggest one-day percentage drop ever. It's been a sharp fall from grace for Arista Networks, which was trading above $331 in mid-April, but has now been cut in half from its record peak at $331.27.

Options traders were positioned for a post-earnings pullback. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Arista Network's 10-day put/call volume ratio of 1.07 ranks in the 86th annual percentile, meaning puts have been bought to open over calls at a quicker-than-usual clip.

Today, options volume is running hot, with more than 7,000 contracts traded already -- 42 times what's typically seen at this point. The weekly 11/1 165-strike and 200-strike puts are most active, and it looks like day traders are initiating new positions here.

 

Same-Day Trading Power: +227% YTD and Counting  — Get in for $10!

We're celebrating 44 years of helping traders win, and you can now tap into one of our most explosive services — Dynamite Day Trading Signals — for just $10.

This service was built for one thing: capturing intraday gains with precision. 

Access two highly-vetted options trades each week -  Complete with defined entries, exits, and a clear plan for same-day profits.

👉 Click Here to Learn More and Position Yourself to Take Action When the Next Alert Hits.