Results 1 to 4 of 4

Thread: Correlation Between Options Activity and Earnings Report

  1. #1
    Spoofee.com! Spoofee's Avatar
    Join Date
    Dec 2001
    Location
    Bay Area, CA
    Posts
    72,600
    Thanks
    193
    Thanked 1,830 Times in 1,177 Posts

    Post Correlation Between Options Activity and Earnings Report

    I'm not a big trader, but sometimes get intrigued by the stock talk that goes around the office. I was wondering if there is a correlation between option activity before an earnings report and the price after earnings report.

    For those that don't know what CALL or PUT options are, it's simply a tool used for high risk, high reward.

    Buy CALL options when you want to bet a stock will go up
    Buy PUT options when you want to bet a stock will go down

    It's extremely dangerous, and I wouldn't get in any deeper than that if you have not yet.

    ----
    That said, Let's look at today's earnings activity.

    Just looking at the companies with bigger market cap
    FFIV, QCOM, BIDU, EBAY, NFLX, WDC

    FFIV - about the same CALL vs PUT options
    - up 7 percent afterhours

    QCOM - about the same CALL vs PUT options
    - up 5 percent afterhours

    BIDU - about 2x+ more CALL options
    - up 3 percent afterhours


    EBAY - about 2-3x more CALL options
    - up 3 percent afterhours


    NFLX - about the same CALL vs PUT options
    - down 9 percent afterhours

    WDC - about 4x more PUT options
    - down 3 percent afterhours


    Seems like you can just bet on a stock to go up or down before earnings if there is a clear sentiment by looking at the options, take that bet. Ignore the ones that don't have a clear call vs put ratio.

    I should probably write a script that does this sort of thing for bigger cap companies to see how often this holds true - when I have time anyways :P
    Last edited by Spoofee; 07-21-2010 at 05:25 PM.
    Thank you for using Spoofee.com

  2. #2
    Spoofee.com! Spoofee's Avatar
    Join Date
    Dec 2001
    Location
    Bay Area, CA
    Posts
    72,600
    Thanks
    193
    Thanked 1,830 Times in 1,177 Posts
    For Thursday 07/22/10

    AT&T - about 3-4x more CALL options
    http://finance.yahoo.com/q/op?s=T+Options
    - if theory is correct, AT&T should report really good earnings
    - Update : yes, they did report good earnings, stock is up 3 percent

    AMZN - about the same CALL vs PUT options
    http://finance.yahoo.com/q/op?s=AMZN+Options
    - Update : Stock is down 13 percent!

    MSFT - about 2x more CALL options
    http://finance.yahoo.com/q/op?s=MSFT&m=2010-08
    - if theory is correct, MSFT should report really good earnings
    - Update : yes, they did report good earnings, stock is flat
    Last edited by Spoofee; 07-22-2010 at 02:53 PM.
    Thank you for using Spoofee.com

  3. #3
    Spoofee.com! Spoofee's Avatar
    Join Date
    Dec 2001
    Location
    Bay Area, CA
    Posts
    72,600
    Thanks
    193
    Thanked 1,830 Times in 1,177 Posts
    For Friday 07/23/10

    VZ - about 6x more CALL OPTIONS
    Quotes for VZ - Yahoo! Finance
    - if theory is correct, VZ should report better than expected earnings and stock should rise after reporting
    Thank you for using Spoofee.com

  4. #4
    L6 Recruit kenji4861's Avatar
    Join Date
    Dec 2005
    Posts
    51
    Thanks
    0
    Thanked 1 Time in 1 Post
    Great analysis.

Similar Threads

  1. Free Options Trading educational DVD
    By Ronshere in forum Freebies and Giveaways
    Replies: 1
    Last Post: 07-14-2007, 06:38 PM
  2. Investing Options Software
    By kimjoe in forum Freebies and Giveaways
    Replies: 0
    Last Post: 05-12-2006, 11:29 AM
  3. Good Web Hosting Options
    By WadeTheWise in forum Off Topic Discussion & General Questions
    Replies: 9
    Last Post: 12-08-2005, 08:47 AM
  4. Replies: 0
    Last Post: 01-19-2005, 03:05 PM

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •  
RSS Feed Facebook Twitter
Spoofee-Footer
Submit Deals
Have a good deal or coupon? Want to share with our members? Please post it on our forums

If it's a hot deal, we will post it on the front page with your name on it!
Follow Us
New Deals
Hot Deals Only (4.5+ stars)
New Coupons
Facebook Fanpage
Avon Catalog