Taking a look at several FAANG names before tonight’s earnings event
Although the current economic climate, the U.S. presidential race, and ongoing stimulus negotiations have seemingly overshadowed this earnings season, all eyes will undoubtedly be turned to this evening’s slew of reports. In fact, nearly every FAANG stock, save for Netflix (NFLX), will reveal their quarterly earnings tonight. These companies, of course, are Facebook, Inc. (NASDAQ:FB), Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), and Google parent Alphabet Inc (NASDAQ:GOOGL). It looks like investors have high hopes for the tech sector this time around, as all four are sporting sizable gains. Below, we’ll dig into some pre-earnings sentiment surrounding these tech giants, and what traders might be able to expect, following the big event.
The options pits are quite muted on all fronts, though Facebook is seeing slightly heavier-than-usual call trading, with 183,000 of these contracts across the tape so far — 1.4 times the intraday average. It looks like the weekly 10/30 300-strike call is getting the most attention, followed by the 280-strike call in the same series, with positions being opened at both. At last glance, FB is up 5.1% to trade at $281.37, suggesting these traders expect the equity to maintain some of this momentum going into the weekend.
Calls have also reigned supreme in the long run, with FB sporting a 10-day call/put ratio of 3.03 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 77% of readings from the past year. Sentiment surrounding GOOGL and AAPL have been similar, with the former’s 10-day call/put ratio of 1.87 falling into the 77th percentile of its 12-month range, and the latter’s 10-day call/put volume ratio of 2.22 standing higher than 83% of readings from the past year. Amazon’s options pits are telling a different story. The security’s 10-day put/call volume ratio of 0.80 at the ISE, CBOE, PHLX stands higher than all but 9% of last year’s readings, suggesting a healthier-than-usual appetite for long puts of late.
The brokerage bunch is still sticking by Amazon’s side. All 31 in coverage consider the stock a “buy” or better, undeterred by the equity’s recent rejection at the $3,492, which is just below its early September all-time high of $3,552.25. At last check, the security was up 2% at $3,225.91, set to topple its 80-day moving average — a trendline it’s been dancing around since late last month.
Apple stock’s 80-day is keeping the iPhone maker’s recent pullback in check too. In fact, the security staged an impressive bounce off the trendline after pulling back from its Sept. 2 all-time high last month. Today, AAPL is up 4.3% at $115.94, with investors looking hopeful before tonight’s close. The security’s post-earnings past might have something to do with some of this optimism. A look back at AAPL’s last eight earnings reports shows just two next-day dips, and an impressive 10.5% post earnings pop of 10.5% during its latest quarter. On average, the stock has staged a 4.6% swing, regardless of direction, and this time around, the options market is pricing in a 7.4% move.
Amazon’s post earnings past hasn’t been as lucky, suffering five negative earnings reactions over the past two years, and averaging a next-day swing of 4.6%. Meanwhile, Facebook averaged a 5.5% move, with mostly positive earnings reactions during this time frame, while GOOGL has suffered a negative next-day reaction more than half the time, averaging a 4.6% move.