Big-cap financial firms continue to make headlines, as third-quarter earnings season heats up. Goldman Sachs Group Inc (NYSE:GS) and Morgan Stanley (NYSE:MS) both posted better-than-expected earnings today, although shares of the former closed lower. Stepping up to the earnings plate tomorrow are U.S. Bancorp (NYSE:USB) before the open and American Express Company (NYSE:AXP) after the close. Here's a closer look at USB and AXP ahead of earnings, and how options traders have been positioning themselves on the financial shares.
Boasting a 23.7% year-to-date gain, American Express stock has surged the charts in 2017 -- and hit an annual high of $93.35 just yesterday. The shares pared a portion of these gains today, though, closing 0.3% lower at $91.69. Plus, the Dow stock could be vulnerable to an even bigger pullback, if past is precedent.
Historically, AXP shares have moved lower the day after five of the last eight earnings reports. On average, the equity has averaged a single-session post-earnings move of 4.5%, regardless of direction. For Thursday's trading, the options market is pricing in a less volatile post-earnings swing of 3.9%. A drop of this magnitude could have the stock testing the $88-$89 region, home to its 40-day moving average.
Options players on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have been betting on the stock to snap its negative earnings history. AXP's 10-day put/call volume ratio of 1.44 stands in the 97th percentile of its annual range, suggesting options players have bought to open calls relative to puts at an unusual pace in recent weeks.