Wendy's will report first-quarter results before the open on Friday, May 2
Wendy's Co (NASDAQ:WEN) will announce first-quarter earnings before the open on Friday, May 2. Options traders are chiming in ahead of the event, with 10,000 puts and 5,491 calls exchanged so far today, which is 6 times the intraday average amount. The most popular contract is the August 15 put, followed by the 18 call in that same series.
Today's penchant for bearish bets points to a sentiment shift. Over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), WEN's 50-day call/put volume ratio of 7.99 ranks in the 98th percentile of annual readings. Should the fast food chain's report miss expectations, there could be a further unwinding of optimism that creates pressure.
It's a mixed bag when it comes to Wendy stock's post-earnings history over the last eight quarter, with four closes lower and four higher. In the last two years, the equity averaged a next-day swing of 2.3%, regardless of direction, but this time the options pits are pricing in a much larger move of 7.1%.
WEN was last seen down 1% to trade at $12.47, dangerously close to its April 9, five-year low of $12.05. The descending 20-day moving average has been guiding shares lower since late March, while the $16 level capped their rally attempt in late February. Pacing for its third loss in the last four sessions, WEN carries a 23.5% year-to-date deficit.
It's also worth noting that Wendy's stock usually outperformed options traders' volatility expectations in the last year. This is per its Schaeffer's Volatility Scorecard (SVS) of 94 out of 100.