The stock is cooling off ahead of the earnings event tonight
The shares of Pinterest Inc (NYSE: PINS) are down 4.5% to $ 73.23 today, ahead of the social media name’s second quarter earnings report released after close of trading tonight. The stock has been gradually bearish since hitting a known cap of $ 78 and has closed a bull gap that helped push the stock higher earlier this month. The 40-day moving average could serve as potential support for PINS, however, and it’s still up 10.7% year-to-date, with an impressive return of 192.6% year over year.
PINS has seen a number of oversized after-profit movements over the past two years, including a 14.5% decline since its last report and a 36.1% increase last year. During that period, the stock averaged 17.9% the next day regardless of direction, which is slightly lower than the 15% swing options that players are pricing in during that time.
Speaking of which, the option pits are bursting with activity ahead of the event. So far, 55,000 calls and 48,000 puts have changed hands – three times the intraday average. By far the two most popular positions are the weekly 7/30 82 and 83 strike calls, with positions being opened on both. This suggests these traders are expecting a notable rally in the underlying stock after the company’s earnings report tonight.
Players with short-term options, on the other hand, were rarely more bearish. That is, according to Schaeffer’s Put / Call Open Interest Ratio (SOIR) of 1.09, which is higher than all but 1% of last year’s readings, suggesting that these traders have been exceptionally put bias lately.
The 10-day put / call volume ratio of the stock reflects this. On the International Securities Exchange (ISE), the Cboe Options Exchange (CBOE) and the NASDAQ OMX PHLX (PHLX) this ratio is over 95% of all other measured values of the last 12 months. This implies a healthier appetite for long puts lately.
On the flip side, the brokerage group has taken a largely bullish stance. Of the 18 PINs recorded, 12 rated PINs as “Buy” or better, compared to six “Hold” ratings. Additionally, the 12-month consensus price target of $ 84.20 is a 14.6% premium over current levels.