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Good morning!
In what is the first important look at a sector of the market during the fresh earnings season, the big bank trio of JP Morgan, Wells Fargo, and Citi are all higher after reporting this morning. Blackrock is slightly lower. The other big name to report this morning, United Health is higher. As options traders, we’re of course looking at more than direction. The magnitude of these moves is equally if not more important. As mentioned over the past week, we enter earnings season with some of the lowest IV we’ve seen in years, and expected moves for earnings the smallest we’ve seen in over a decade. JP Morgan options were pricing a 2.4% move, the stock is higher by 2.7% or so pre-market. Wells Fargo options were pricing about a 3% move, the stock is higher by about 3.1%. Citi options were pricing in about a 3% move and the stock is higher by about 1.6%. So options had the moves more or less correct on average, with JPM beating the expected move and Citi inside the move. As a rule of thumb about 70% of the time stocks should be at or inside the expected move on earnings. And of course, that stat is marked to the end of the day for stocks that report before the bell so the jury is still out on today. But it is something to keep a mental note of, whether we begin to see moves beyond the expected move or if options have it right, even at this low level of vol. As it could inform trade decisions, including holding positions into earnings as the vol collapse is quite different than it normally is.
Additionally, and especially as we start to hear from some tech stocks that have had a really good couple of months, are the moves to the upside the ones we see stocks beat, and are moves to the downside safer because there’s an underlying bid in large parts of the market? Something to keep an eye on.
Pre-Market Movers:
- Nikola Corp (NKLA) +21.69%
- Arb Iot Group Limited (ARBB) +50.00%
- Painreform Ltd (PRFX) +40.87%
- Bank of America Corp (BAC) +1.75%
- Intuitive Machines Inc (LUNR) +16.98%
- Theseus Pharmaceuticals Inc (THRX) -67.44%
- Wells Fargo & Company (WFC) +3.68%
- Citigroup Inc (C) +1.13%
- JP Morgan Chase & Company (JPM) +2.92%
- Microsoft Corp (MSFT) +1.62%
- Jd.com Inc ADR (JD) -2.49%
Today’s Earnings Highlights:
- JPMorgan Chase & Co. (JPM) Expected Move: 3.06%
- UnitedHealth Group Incorporated (UNH) Expected Move: 3.44%
- Wells Fargo & Company (WFC) Expected Move: 4.24%
- BlackRock, Inc. (BLK) Expected Move: 2.60%
- Citigroup Inc. (C) Expected Move: 3.21%
Full list here: Options AI Earnings Calendar
Economic Calendar:
- At 08:30 AM (EST) Import Prices MoM (Jun) Estimates: -0.1, Prior: -0.4
- At 08:30 AM (EST) Export Prices MoM (Jun) Estimates: -0.2, Prior: -1.9
- At 01:00 PM (EST) Michigan Consumer Sentiment (Jul) Estimates: 65.5, Prior: 64.4
Chart of the Day
Tesla reports earnings next week. At the moment, options are pricing a 6.9% move.
That’s all for now. Have a great day!
The Options AI Team
Based upon publicly available information derived from option prices at the time of publishing. Intended for informational and educational purposes only and is not any form of recommendation of a particular security, strategy or to open a brokerage account. Options price data and past performance data should not be construed as being indicative of future results and do not guarantee future results or returns. Options involve risk, including exposing investors to potentially significant losses and are therefore not suitable for all investors. Option spreads involve additional risks that should be fully understood prior to investing. Securities trading is offered through Options AI Financial, LLC, member FINRA and SIPC.
