Verizon Options Market Prices 3.9% Swing on July 24 Earnings

Options traders are pricing in a potential 3.9% move in either direction for Verizon Communications Inc. (VZ) shares following the company's upcoming earnings report on July 24. This expectation is based on an analysis of options market data compiled by Bloomberg.

Market Expectations

The telecommunications giant is scheduled to release its financial results before the market opens. The 3.9% implied move is derived from the pricing of at-the-money options contracts and reflects the market's consensus on the stock's potential volatility. It does not predict the direction of the price change, but rather its potential magnitude.

Investors will be closely watching for updates on subscriber growth, 5G network deployment, and the company's outlook amid a competitive wireless market. These results will be the primary catalyst for the stock's post-announcement performance.

Historical Performance vs. Implied Moves

An analysis of Verizon's past earnings announcements shows a mixed record of meeting these volatility expectations. According to the data, the stock's actual post-earnings move has surpassed the options-implied swing in three of the past eight reporting periods.

Ad

Notable recent examples include:

• January 30: An actual move of 12.8%, significantly exceeding the 3.8% implied move.
• July 22, 2024: A -5.6% decline, which was larger than the 3.7% move priced in by options.
• April 27: A muted 1.2% move, falling well short of the 3.9% implied volatility.

Significance for Investors

The implied move serves as a critical benchmark for investors, particularly those using options strategies to trade around earnings events. It provides a data-driven gauge of market sentiment regarding the potential impact of the report.

Traders often compare the implied move to their own analysis to determine if options are attractively priced for strategies that bet on either high or low volatility. The historical data provides context on the reliability of the market's volatility forecast for Verizon's stock.