Options Traders Take Sides Ahead of Peloton Earnings

PTON puts have been in high demand in recent weeks

by Karee Venema

Published on Nov 4, 2019 at 2:17 PM
Updated on Jun 24, 2020 at 10:16 AM

Peloton Interactive Inc (NASDAQ:PTON) is slated to take its inaugural turn in the earnings confessional as a publicly traded company before the market opens tomorrow, Nov. 5. The options market is pricing in a volatile earnings reaction, with the implied earnings deviation for PTON last seen at 19.7%, and speculators are taking positions on both sides of the fence ahead of the event.

With a little over 90 minutes left in today's trading, roughly 4,000 puts and 6,700 calls are on the tape -- 1.5 times the expected intraday amount. The weekly 11/8 30-strike call is most active, and it looks like new positions are being purchased here for a volume-weighted average price (VWAP) of $0.20. If this is the case, breakeven for the call buyers at the close this Friday, Nov. 8, is $30.20 (strike less premium paid).

The weekly 11/8 23.50-strike put is also in high demand, and buy-to-open activity has been detected. The VWAP on these short-term puts is $1.23, meaning put buyers will profit the further below breakeven at $22.27 (strike less premium paid) Peloton Interactive stock may fall through week's end.

More broadly speaking, options traders have shown a preference for puts over calls in recent sessions. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculative players have bought to open 1.43 puts for each call over the last 10 days.

Looking at the charts, Peloton stock made its trading debut on Sept. 26, opening at $27 -- below the exercise bike maker's initial public offering (IPO) price of $29 per share. The equity hit its record high of $27.98 that day, before sliding to its all-time low of $20.46 by Oct. 23. The shares closed six of the next seven sessions higher, but are down 0.2% today at $24.95.

peloton stock daiy price chart on nov 4


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