Trade Desk Options Traders Price in 13% Swing on Upcoming Earnings

Options traders are pricing in a potential 13% move in either direction for The Trade Desk Inc. (NASDAQ: TTD) shares following the company's upcoming earnings release. The advertising technology firm is scheduled to report its financial results after the market closes on August 6.

What the Options Market Implies

The anticipated move is derived from the pricing of options contracts expiring shortly after the earnings announcement, as reported by Bloomberg. This implied volatility reflects market expectations for the stock's price swing based on the results, forward guidance, and management commentary. It serves as a key gauge of investor uncertainty heading into the event.

For traders, this figure is a benchmark for strategies that speculate on or hedge against post-earnings volatility. A move larger than 13% would be a win for options buyers, while a smaller move would favor sellers.

A History of Volatility

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The Trade Desk has a track record of significant price movements following its earnings reports, often surprising the market. The stock's actual move has exceeded the options-implied swing in three of the past eight earnings announcements.

Past instances of outsized reactions include:

• A 37.2% decline versus an 11.6% implied move.
• A 32.5% increase compared to a 14.6% implied move.
• A 27.8% drop against an 11.4% implied move.

In the other five of the last eight reporting periods, the stock's price change remained within the range predicted by the options market, according to the data. This history highlights the potential for substantial risk and reward for investors around the company's quarterly updates.