2 Stocks Swinging Lower After Earnings

Options traders are chiming in on both stocks

Deputy Editor
Aug 8, 2023 at 3:31 PM
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Datadog Inc (NASDAQ:DDOG) stock is gapping lower despite a strong second-quarter report, after the company's disappointing current-quarter and full-year revenue forecasts. Several analysts hiked their price targets on DDOG ahead of its earnings report, though today Needham is chiming in with a price-target cut to $110 from $135. At last glance, DDOG was down 17.2% at $88.00, earlier as low as $83.87, though its 150-day moving average moved in as support. Year-to-date, the equity is up 19%. 

In the options pits, 54,000 calls and 56,000 puts have been exchanged so far, which is 3.7 times the average daily volume already. The September 70 put is the most active contract, with new positions being sold to open there. DDOG puts were quite popular leading up to the earnings event, per its 10-day put/call volume ratio of 1.59 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks in the 94th percentile of its annual range. 

Palantir Technologies Inc (NYSE:PLTR) is staging a post-earnings drop as well, down 5.6% at $16.99 at last glance. The $16 level appears to be keeping today's losses in check, after serving as a floor for pullbacks at the end of last month. The company, which has been in the spotlight due to the artificial intelligence (AI) buzz, announced a strong second-quarter report and a $1 billion buyback program, after which no fewer than four analysts lifted their price targets. Investors appear to be unimpressed, however, and one analyst, Jefferies, noting lackluster guidance. 

Options traders appear to be buying in on the dip, with 500,000 calls exchanged so far today, outweighing the 293,000 puts. The weekly 8/11 17-strike call is the most popular, with new positions being opened there. On the short sell restricted (SSR) list today, it's worth noting that short interest represents 7% of the stock's available float. 

 

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