Financial giant American Express Company (NYSE:AXP) is 1% higher this afternoon at $128.41, ahead of the company's quarterly report, slated for before the market opens tomorrow, July 19. Below, we will take a look at how AXP has performed on the charts, and see what the options market is pricing in for the shares' post-earnings move.
American Express stock has been on a sharp uptrend since late December, now up 34% year-to-date. Guiding the shares' surge has been the supportive 20-day and 40-day moving averages -- the latter capturing a brief pullback in late May and early June. Most impressive, the stock touched a record high $129.34 this past Tuesday, July 16.
Looking at the credit card company's earnings history, the Dow stock has closed higher the day after earnings in four of the past eight quarters -- including the past three in a row. Over the past two years, the shares have swung an average of 2.4% the day after earnings, regardless of direction. This time around, the options market is pricing in a larger-than-usual 3.4% swing for Friday's trading.
Meanwhile AXP's Schaeffer's put/call open interest ratio (SOIR) comes in at 0.81, and ranks in the low 18th annual percentile. This suggests call open interest outweighs put open interest by a greater-than-usual margin on options expiring within the next three months.
Drilling down, the July 131 call is home to peak front-month open interest. Data from Trade-Alert indicates a mix of buy- and sell-to-open activity here in recent weeks. Those buying the calls expect AXP stock to break out above $131 by expiration at tomorrow's close, while those selling the calls expect the strike to serve as a near-term ceiling -- or perhaps hope to profit on a post-earnings volatility crush.
Today, though, American Express puts are seeing a surge in volume. At last check, around 11,000 puts were on the tape, compared to fewer than 5,600 calls. It looks like one trader may be initiating a long put spread with the August 120 and 125 strikes, expecting AXP to retreat back to $120 by August options expiration.