How Options Traders Are Playing 3 Vax Stocks Ahead of Earnings

Hey Traders,

Earnings season is still rolling along, although we have already seen the biggest mega-caps step up to the earnings mic.

However … there’s still plenty more notable names to come.

And with the CDC set to meet and discuss vaccine recommendations for children this week, a few of the big-name vaccine stocks are set to really have a busy few days.

Here’s a look at the three big vaccine names set to report this week.

Pfizer (Ticker: PFE)

The O.G. vax stock is set to step into the earnings confessional on Tuesday, November 2, ahead of the market open.

The shares hit a string of all-time highs this summer, fuelled by the “booster rally” in September. 

They have since fallen back to $43.58, but may be on the upswing again headed into earnings.

Chart courtesy StockCharts

Looking at the pricing of at-the-money straddles can give us a good idea of what kind of post-earnings swing options traders are pricing in for the shares.

According to PFE’s at-the-money straddle pricing for the expiration immediately following earnings, traders are anticipating about a 5.1% swing out of PFE shares. This would put them between $45.73 and $41.27.

How does this compare to PFE’s typical post-earnings move?

Looking at the trading session following earnings over PFE’s last eight quarters, the shares have seen a mean move of just 2.5%. 

This tells me that either traders are anticipating a larger-than-usual swing from the pharma … and that options are likely a bit overpriced right now!

That hasn’t deterred options traders though. PFE’S open interest shows that calls are outpacing puts nearly two-to-one, and PFE’s open interest sits on the higher end of its annual range, suggesting PFE pits are a bit more active — and bullish — than usual.

Moderna (Ticker: MRNA)

MRNA is set to release its earnings on Thursday ahead of the open.

To the surprise of … probably no one, MRNA has had a blockbuster of a year, recently hitting an all-time high of $497.49. 

Of course, the shares have given back a fair bit of that early-summer, booster-inspired rocket higher, and currently sit at $330.47 …

But that still represents a 1,280% increase (or more) from where the shares were trading early in the year.

Chart courtesy StockCharts

Over the last eight quarters, MRNA has seen a mean move of 6.5% in the session following its earnings report.

This time around, at-the-money straddle buyers are pricing in around an 8% swing, which would put MRNA in a trading range of $356.95 and $303.05.

In the pits, put open interest is slightly outpacing calls, suggesting traders are slightly more bearish than usual on MRNA shares.

CVS Health (Ticker: CVS)

CVS might not be one of the top three stocks that comes to mind when you think of vaccine stocks …

But Johnson & Johnson (Ticker: JNJ) already reported last week!

CVS has actually received some major tailwinds from the steady stream of vaccinations, thanks to increased foot traffic in stores, as well as revenue associated with the vaccines themselves.

So what does the stock look like ahead of their Wednesday earnings report?

Currently trading around $90.70, CVS shares are a little over 6% off their 2015 all-time high of $96.36 — could a positive earnings boost push them over the top?

Chart courtesy StockCharts

Given CVS’s average post-earnings move of 3.2%, maybe not.

Confirming this, options traders are currently pricing in a 3.9% move for the pharmacy chain in the trading session following Wednesday’s report, which would put CVS’s anticipated move between $93.61 and $86.39.

Looking at current open interest, calls currently outnumber puts … but not by much. The current put open interest lies in the 87th percentile of its annual range, indicating that options players are more put-skewed than usual headed into Wednesday’s report.

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