US-Listed Chinese Stocks Earnings Are Coming; Options Market Sentiment Turns Bullish

Implied volatility often spikes before a company releases its earnings, as market uncertainty drives up demand for options from speculators and hedgers. This heightened demand inflates both the implied volatility and the price of the options. Following the earnings announcement, implied volatility generally returns to normal levels.

Here are the top earnings and volatility for the week:

$Marathon Digital Holdings Inc(MARA)$  

Earnings Release Date: MARA is set to report earnings on November 12, 2024 after market close

The option open interest in MARA climbed 2.0% to 1.6 million contracts. The current open interest is above its 52-week average of 1.3 million contracts. Currently, the OI percentile rank is 91.6% according to Market Chameleon. In the last 5 days, the put/call ratio for MARA increased by 0.9% to 0.4, which is below the 52-week average of 0.5.

The options market overestimated MARA stocks earnings move 67% of the time in the last 12 quarters. The predicted move after earnings announcement was ±11.0% on average vs an average of the actual earnings moves of 8.3% (in absolute terms).

The implied volatility skew shows that the market sentiment is Bearish on MARA Holdings. The current 25-Delta Put-Call Spread is -1.0, above its 20-day moving average of -4.8, indicating the implied volatility for downside puts is increasing relative to upside calls. This suggests that the market is pricing in a larger fear to a downside move.

$Alibaba (BABA.US)$ 

$Alibaba (BABA.US)$ gapped up powerfully on Sept. 24 after China loosened lending standards to stimulate an economy that's been slow to recover. The news fueled a broad rally in several Chinese internet stocks like $JD.com(JD)$  , $Pinduoduo Inc.(PDD)$  , $Baidu(BIDU)$   and $Bilibili Inc.(BILI)$  . However, recently, these stocks have seen some pullbacks. As a result, this earnings season is crucial, as it will largely determine whether the current rebound can continue.

From the perspective of implied volatility skew, market sentiment is Slightly Bullish on Alibaba.

Besides, the call option with a strike price of $115 expiring on November 15th, 2024, saw the highest OI increase of 5,204 contracts from the previous trading day, bringing the total open interest to 16,194 contracts.

$JD.com (JD.US)$

Earnings Release Date: JD is set to report earnings on November 14, 2024 before market open

The options market overestimated JD stocks earnings move 69% of the time in the last 13 quarters. The predicted move after earnings announcement was ±7.5% on average vs an average of the actual earnings moves of 6.6% (in absolute terms).

The call option with a strike price of $45 expiring on January 17, 2025, saw the highest OI increase of 10,067 contracts from the previous trading day, bringing the total open interest to 24,712 contracts.

Meanwhile, the call options with strike prices of $65 and $50 also expiring on January 17, 2025, saw increases in open interest of 6,910 and 6,550 contracts, respectively. This suggests that options market investors are bullish on JD in the short to medium term.

The implied volatility skew indicator also shows that market sentiment is Slightly Bullish on JD.

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