Ahead of Alcoa Earnings: Speculators Mount Options Assault (AA)

Posted in General, Options 
July 12th, 2010

Alcoa, Inc. (NYSE: AA) is to be the first of the 30 Dow Jones Industrial Average components reporting earnings this earnings season with results due after the close today.  Right after 2:05 PM EST we have shares trading down 0.7% at $10.87 on almost 26 million shares.  The real move is in the speculative options trading, and we’d be looking for those speculative CALLS to be bought even more going into the close when the intraday price trading risk becomes less and less in the stock.

The July options expire this Friday, and the following is what we have seen per speculative strike price along with the volume and open interest:

  • 11.00 at $0.28: 14,371 traded vs. 26,091 open interest
  • 12.00 at $0.06: 4,416 traded vs. 38,455 open interest
  • 13.00 at $0.03: 1,458 traded vs. 41,860 open interest

The 52-week trading range is $9.04 to $17.60, and earnings estimates have come in sharply since the last pre-earnings.  The Thomson Reuters estimates for today are now ‘only’ $0.12 EPS.  The estimates were up at $0.23 EPS about 3-months ago.

After the sell-off we have seen in shares, from $14 to $10 before the latest week’s recovery, today’s stock options do not look too overpriced in a manner which would keep speculators on the sidelines.


Comments are closed