Bears Flock to Cal-Maine Foods Before Earnings

CALM has struggled on the charts over the long term

Egg producer Cal-Maine Foods Inc (NASDAQ:CALM) is up 0.6% at $39.32 this afternoon, with the long-term underperformer set to snap its two-day losing streak. History suggests the stock could be in store for more downside after the company's fiscal fourth-quarter earnings, slated for release before the market opens this Monday, July 22. Below, we will take a look at how CALM has been faring on the charts, as well as what the options market is pricing in for the stock's post-earnings move.

As alluded to above, CALM has struggled to gain ground over the past year. Despite multiple breakout attempts, the 160-day moving average has been a stiff ceiling for the shares, and has helped usher the equity to a roughly 14% year-over-year deficit.

Looking at the food concern's earnings history, the stock has closed lower the day after earnings in six of the past eight quarters -- including a 3% decline in April and a 6.8% drop in October. Over the past two years, the shares have swung an average of 3.8% the day after earnings, regardless of direction. This time around, the options market is pricing in a larger-than-usual 6.3% swing for Monday's trading.

Near-term options traders are unusually put-skewed on Cal-Maine stock, according to its Schaeffer's put/call open interest ratio (SOIR) of 3.57, which ranks in the 93rd annual percentile. The August 40 and 42.50 puts are home to heavy open interest, and data from Trade-Alert points to buy-to-open activity here.

The skepticism toward Cal-Maine Foods has grown outside of the options pits, too. Short interest grew 7.1% during the most recent reporting period, and now accounts for 19.4% of the stock's total available float. At the security's average pace of trading, it would take shorts a full week to buy back their bearish bets.