The shares of Kroger Co (NYSE: KR) are up 0.6% to trade at $32.73 this afternoon, just one day ahead of the company's first-quarter earnings report, which is due out before the market opens tomorrow, June 18. Below, we'll take a look at how Kroger stock has been performing on the charts of late, and explore some of the options activity surrounding the stock ahead of its earnings event.
While Kroger has cooled since its mid-March record highs, the stock is still enjoying stability on the charts, with several levels of support just below, including its 100-day moving average. While overhead pressure has emerged at the $34 level, the security still boasts a 36% year-over-year lead.
Analysts are still hesitant toward KR, leaving the door wide open for upgrades. Of the 16 covering the stock, 10 call it a "hold" or worse, while just six say "strong buy." Meanwhile, the 12-month consensus target price of $35.01 is just a 7.5% premium to current levels.
The options pits are much more optimistic, however. In the last 10 days, 6.06 calls were bought for every put at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than 85% of readings from the past year, meaning calls are being picked up at a faster-than-usual clip.
Today, in the last hour of trading, 79,000 calls and 47,000 puts have been exchanged -- six times what is normally seen at this point. The most popular is the monthly June 33 contract, followed by the 30 put contract in the same series, with these positions expiring this Friday.
A look at KR's history of post-earnings reactions during the past two years shows a generally mixed response. During its last eight reports, half of these next-day sessions were lower, including a 10% drop in July of 2019. The security averaged a post-earnings swing of 5.8%, regardless of direction. This time around, the options market is pricing in a much higher move of 11.9%.