Michael Kors Holdings Ltd KORS reports Q4 earnings ahead of the market open Wednesday and TD Ameritrade Chief Strategist JJ Kinahan told Benzinga what the options market looked like for the stock.
The Estimize consensus expected EPS of $0.93 on revenue of $1.101 billion. In comparison, the Wall Street consensus was less bullish and anticipated EPS of $0.91 on revenue of $1.080 billion, while the company had guided revenue at $1.065 billion with EPS of $0.91 for the quarter.
Kinahan said that based on implied volatility, the market was expecting a move of just over 4 percent (up or down) for the stock following earnings.
“This is a stock that is coming off a pretty big drop recently,” Kinahan told Benzinga, and he noted that the shares had dropped about $2 and then re-traced about half what they lost.
Related Link: Michael Kors Earnings Preview: Can It Beat Growth Estimates?
Looking at the options market versus the stock itself, Kinahan said that the options market was expecting a bigger move in the stock's price.
The stock was at the 3rd percentile from a volatility perspective because it had moved relatively little over the past week, according to Kinahan; however, the options were at the 74th percentile.
Looking at activity in the options market, Kinahan said there was increased trading activity in the May $60/$62 Put spread with a closing order and increased buying in the May $60 Puts.
Kinahan added that Put trading on the stock was elevated, trading a 6 times the normal amount.
Heading into its earnings release, Michael Kors Holdings Ltd closed at $60.59 Tuesday, down 1.69 percent.
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