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Halliburton Options Warm Up Ahead of Earnings

The stock is getting a halo lift today after Schlumberger's earnings and revenue beat

Digital Content Manager
Oct 18, 2019 at 2:04 PM
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The shares of oilfield services name Halliburton Company (NYSE:HAL) are getting a halo lift on Schlumberger's (SLB) third-quarter earnings and revenue beat -- out earlier today. The stock has added 1.6% to trade at $18.81 so far today -- eyeing its highest close this week.  HAL will soon be joining it's sector peer in the earnings confessional, too, with a third-quarter report expected out before the open on Monday. 

The halo lift helped brush off a bear note from Citigroup -- which slashed its price target to $25 from $27 last night. HAL's consensus 12-month price target of $27.40 still sits at a lofty 45.5% premium to current levels, however. Plus, a whopping 15 in coverage consider Halliburton a "strong buy," compared to only three who say "hold." This incredibly bullish sentiment might come as a surprise to some, especially considering the stock's 29.3% year-to-date deficit. 

Lately, the options pits have been unusually bullish, too, with nearly six calls bought for every put on the  International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) during the past 10 days. This ratio sits higher than 93% of all other readings from the past year, too, suggesting that this tendency towards calls is unusual. 

Options players are ramping up ahead of earnings, too, with 20,000 calls and 18,000 puts across the tape so far today -- two times what's typically seen at this point. Seeing the most action is the June 2020 19-strike put, where new positions are being opened.

Taking a look at HAL's post-earnings sessions from the past two years, the stock is averaging a 4.1% swing, in either direction. However, the firm's last earnings report produced a 9.1% next-day pop. This time, options players are pricing in a 6% swing.

 

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