Options Players Target DocuSign Stock Ahead of Earnings

Bulls and bears are neck-and-neck ahead of DOCU's report

Deputy Editor
Mar 9, 2022 at 1:34 PM
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With a dismal post-earnings session right in the rear view, and an upcoming quarterly report due out after the close tomorrow, March 10, options traders are solidly split down the middle when it comes to DocuSign Inc (NASDAQ:DOCU). So far, 14,000 calls and 14,000 puts have exchanged hands, which is double the intraday average. The weekly 3/11 70-strike put is popular, followed closely by the March 105 call, and positions are being opened at both. 

Sentiment among options traders has been optimistic overall, though. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), DOCU sports a 50-day put/call volume ratio of 1.76, which sits higher than 89% of readings from the past year. In other words, options traders are picking up long calls at a quicker-than-usual clip of late. 

Short-term options traders have been more call-biased than usual as well, per the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.91, which sits in the 20th percentile of its annual range. 

Meanwhile the stock itself is surging, last seen up 8% at $99.37. DOCU is just coming off a near two-year low of $90.90, with pressure forming at the 30-day moving average during the past month. In response, the shares have been chopping lower, and now sport a 53.7% year-over-year loss -- also thanks in part to their aforementioned post-earnings bear gap this past December. 

docu march 9

Analysts are also split ahead of the event, though both Citigroup and UBS chimed in with price target cuts to $137 and $110, respectively, earlier this week. Eight covering brokerages call DOCU a "buy" or better, while seven say "hold" or worse. The 12-month consensus price target of $177.45, on the other hand, is a heavy 78.3% premium to current levels.  

An even closer look at DocuSign stock's post-earnings past reveals some dramatic swings during the last two years. Besides its 42.2% plummet in December, the security bounced 19.8% the day after its June earnings, and dropped 10.6% after its September 2020 event. The stock has managed a positive next-day swing after four of these eight sessions, averaging a 12.8% move, regardless of direction. This time around, the options pits are pricing in a more than double post-earnings return of 27.7%. 

 




 
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