The bullish signals ahead of this week’s Mag-7 earnings
The Meta corporate logo at the Fira Gran Via booth highlights the company’s “First Artificial Intelligence” hardware ecosystem during Mobile World Congress.
Joan Cros | Nurfoto | Getty Images
As the S&P 500 continues its record streak, one key group of stocks has lagged the broader market: the Magnificent 7. Options investors believe that could change this week.
How Apple, Alphabet, Amazon, MetaAnd Microsoft The performance of stocks relative to earnings will likely decide how high the broader market can go. S&P 500 While it increased by 2.4% on an annual basis, Mag-7 remained basically flat.
Calls are trading more expensive than puts for the five names that reported this week, and exceeding call volume is driving volume in all names except Alphabet.
In Alphabet’s case, investors are betting on an unusually big move. Even though the stock has only fluctuated an average of 1% over the last four quarters, option prices around earnings imply a move of 5.25%. This means that these options look a bit rich compared to recent history.
Alphabet, YTD
On the other hand, there may be things in Meta options that are easier to get bored of. While implied movement at the social media giant has been 7%, actual stock movement around earnings has averaged 9% over the past four quarters.
Meta, YTD
Option prices increase with steep moves in technology companies and Cboe Volatility index Investors who have established a solid holding in their mid-18s will want to be careful about how much they spend placing directional bets, especially considering that volatility almost always decreases the day after earnings.
