While most of the bigger names have come and gone for the quarter, some companieshave yet to take their turn in the earnings confessional. Cloud content management specialist Box Inc (NYSE:BOX) is due up this week, reporting third-quarter earnings after the market closes tomorrow. Here's a closer look at BOX's performance lately, and how options traders are playing the cloud name ahead of earnings.
It's been an outstanding year for BOX stock. The cloud name has added 63% year-to-date, with the shares' rising 20-day moving average containing recent pullbacks. Yesterday, the equity touched a two-year high of $24.10,a chip-shot from its record high of $24.73, which was achieved promptly after its January 2015 initial public offering (IPO).
Box has a mixed history of earnings reactions. Overall, BOX stock has averaged a one-day post-event move of 5%. This time around, the options market is pricing in a larger-than-usual one-day swing of 10.4%, per Trade-Alert. A move of this magnitude would send BOX stock surging past its record high.
Going back two weeks, recent data underscores a bearish trend among options traders. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock sports a 10-day put/call volume ratio of 0.44, which ranks in the 89th percentile of its annual range. In other words, traders have been buying to open puts at an unusually rapid pace relative to calls in the days leading up to Box Inc's earnings report.
Digging deeper, the December 22 put saw the largest increase in open interest during this time frame. Those buying the puts expect BOX to slip in the weeks following its earnings report, and those selling the putsare expecting the $22 level to serve as a short-term floor.
Today, roughly 4,200 options have changed hands on BOX -- three times what's typically seen at this point in the day, with volume pacing in the 95th annual percentile. The December 22 put is the most popular, while other traders appear to be buying to open positions at the December 26 call. If this is the case, they're expecting the security to rise above $26 in the weeks ahead.