Q2 STOCKS TO BUY

Earnings Preview: NQ Mobile Inc and Best Buy Co Inc

The options market is pricing in huge swings after earnings for both NQ Mobile Inc (ADR) (NYSE:NQ) and Best Buy Co Inc (NYSE:BBY)

Aug 22, 2016 at 2:53 PM
facebook X logo linkedin


The sun is beginning to set on earnings season, but a few notable companies are still due to report. For instance, telecom stock NQ Mobile Inc (ADR) (NYSE:NQ) will hit the confessional tonight, while electronics retailer Best Buy Co Inc (NYSE:BBY) will tell all tomorrow morning. Below, we'll take a closer look at pre-earnings options expectations for both NQ and BBY.

NQ is up 0.4% at $4.50, with just a few hours to go before the company reports earnings. Call buyers have been extremely active ahead of the event, according to data at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, during the past two weeks, traders have bought to open more than 7,100 NQ calls and fewer than 400 puts.

On the charts, the stock has been charging higher since approaching 10-month lows around the $3 level in late July and early August, soaring nearly 50%. If past is prologue, another sharp move could be in store. Right now, the options market is pricing in a 21.1% post-earnings move for tomorrow's session. Historically speaking, NQ Mobile Inc shares have averaged a 14.5% one-day swing in the immediate aftermath of the company's last eight reports.

Turning to BBY, options buyers are in a frenzy, with contracts trading at seven times the usual intraday clip. More specifically, speculators are buying to open the weekly 8/26 33-strike call and 30-strike put, among several other options. In the past four weeks, call buyers have been in the driver's seat, based on the stock's 20-day ISE/CBOE/PHLX call/put volume ratio of 1.79. Of course, some of these seemingly bullish bettors could actually be short sellers seeking an upside hedge, with 11.5% of BBY's float dedicated to short interest.

That's not to say BBY hasn't warranted optimism. In fact, the shares have outperformed considerably since their most recent test of the $29 region in mid-June, but have struggled to take out resistance in the $34-$35 area. At last check, the stock was up 0.1% at $32.64.

With respect to earnings reactions, Best Buy Co Inc could go either way. In the session following the company's past eight reports, the stock has resolved higher half the time, and lower the other half. In any case, the options market is pricing in a bold 10.6% post-earnings swing this time around -- or double its typical one-day move over the prior eight quarters.

Let us help you profit from market volatility. Target big gains in short order with a 30-day trial of Schaeffer's Weekly Volatility Trader!

 
 

“Buy This Stock Now!” - Expert Who Called 11x On TSLA

He called a rare 11x on Tesla…

But now, thanks to Elon & Trump’s new alliance…

He says there’s a new opportunity that could be 1,000x BIGGER than Tesla – and it could completely revolutionize a $23 Trillion market.

It’s trading for less than $5 per share right now…

But it won’t be under the radar for long.

Discover The 1,000x Bigger Elon Opportunity Here

GRAND SLAM COUNTDOWN

 
 

Featured Articles from Trusted Partners:

👀Learn How Dividends Create Passive Income for Life
Receive $200 Off Motley Fool Epic. The Motley Fool Epic $299 discounted offer is based on $499/year list price. Introductory promotion for new members only. Take control of your money and your portfolio with Motley Fool Epic.

💵New Income System Could Pay You $4,243 Monthly
You could collect an average of $4,243 per month starting as early as next week with a new payout system for income investors. New registrations are being accepted for investors who want to be in a position to start with their first payout next week.

🚀Easy 92% Crypto Dividends (No Coins Required)
COIN stock doesn't pay a dividend... But there's actually a new way to collect a massive dividend that's indirectly based on the stock and offers a terrific monthly income (currently yielding nearly 92% on a forward basis).

🤝Free Advisor Match with Wiseradvisor.com
Don't leave your retirement to chance! Get matched with a trusted financial expert for FREE and make the most of your tax refund. Get started now.

⚠️Dennis Quaid's #1 Warning for Americans
Here's the thing: life doesn't come with guarantees. The economy shifts, markets stumble, and years of hard work could slip through your fingers like sand. But it doesn't have to be that way for you. So request a free copy of this Gold & Silver Guide that will arrive right to your doorstep when you act now.

 

 
 

Follow us on X, Follow us on Twitter