KEYS Unlocks Fresh Highs Ahead of Earnings

The options pits are overwhelmingly bearish ahead of the event

Deputy Editor
Nov 17, 2020 at 3:31 PM
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The shares of Keysight Technologies Inc (NYSE:KEYS) are up 0.2% at $117.87 at last check, just a day after hitting a Nov. 16 record high of $118.76. With help from the 10-day moving average, the equity rallied past pressure at the $108 region a few weeks ago, going on to add 12% so far in November. Up next, the company will be reporting fourth-quarter earnings after the close on Wednesday, Nov. 18.

It's been mostly smooth sailing for Keysight stock, as far as post-earnings moves over the past two years are concerned. The security finished higher in six of eight next-day sessions, though a 6.7% drop in August is worth noting. This time around, the options pits are pricing in an 8.3% post-earnings swing, much bigger than the 5.5% move the equity averaged over the the last eight quarters, regardless of direction. 

In the options pits, sentiment is more bearish than usual. This is per the stock's 10-day put/call volume ratio of 8.74 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than all other readings from the past 12 months.

The brokerage bunch is far more optimistic, with six of the seven analysts in coverage sporting a "strong buy." Meanwhile, the stock's 12-month consensus price target of $124.23 is a 5.6% premium to current levels.

Now looks is the ideal time to take advantage of Keysight Technologies stock's next move with options. The security's Schaeffer's Volatility Index (SVI) of 38% sits in the extremely low 19th percentile of its annual range. In other words, the equity sports attractively priced premiums at the moment.

 

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