FFIV Calls Pop Ahead of Earnings Report

The stock tends to move higher the day after earnings

Deputy Editor
Jan 24, 2020 at 1:18 PM
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With earnings just around the corner software developer F5 Networks, Inc. (NASDAQ:FFIV) is gaining some traction today, with a little help from long-term support at the $132 region. The firm is expected to post its fiscal first-quarter earnings after the close on Monday, Jan. 27, and at last check the stock is up 0.9% to trade at $135.20. 

Options bulls have been flocking to the networking concern ahead of its big quarterly event. While overall volume is still light, the 844 calls that have crossed the tape so far double the intraday average. Positions are being opened at the weekly 1/31 136-strike and 134-strike calls, while the weekly 1/24 134-strike call is also quite popular. 

This bullishness is unsurprising, considering FFIV tends to do well the day after earnings. Looking back at its last eight reports, the majority of its post-earnings moves were positive, including a next-day jump of 5.5% during its last report, and a 6.1% pop a year prior. During these past two years, the security has averaged a next-day move of 2.8%, regardless of direction. This time around, the options pits are pricing in a swing of 6.3%. 

A tendency toward bullish bets is the norm for 5F, too. During the past 10 days 2.49 calls have been bought for every put at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than 79% of all other readings for the past year, suggesting a bigger-than-usual appetite for long calls of late. 

A shift in sentiment could give the shares an extra boost after earnings. Currently, nine in coverage consider FFIV a "hold" or worse, while only four call it a "buy."

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