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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.
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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
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
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