Options Pricing Implied a Bigger Earnings Move for Alphabet Than Microsoft

Options pricing pointed to a larger post-earnings swing for Alphabet than Microsoft on Wednesday, with the gap set against sharply different recent share performance and past earnings reactions.

The implied move for Alphabet was 5.8%, more than twice its average 2.7% reaction after earnings over the previous two years. Microsoft’s implied move was below 5%, compared with its average 6% swing over that period.

Alphabet shares were about 20% below their May closing high. Microsoft was less than 1% below its record closing price from earlier in October. Alphabet fell 7% after its previous quarterly report and gained 10% after the report before that.

Put-call ratios for both stocks rose as the Nasdaq 100 retreated. The ratios remained below 1 over the past year, meaning calls still outnumbered puts. Microsoft’s ratio was 0.59, up from a June low of 0.43. Alphabet’s reached 0.72, its highest level since August.

Alphabet’s Tuesday options trading totaled 435,000 contracts. Nearly 102,000 call trades appeared to be initiated by buyers, compared with 54,000 by sellers; the rest were near the midpoint price.

Some of the heaviest call activity was at the $360 strike for January expiration. Apparent buying of those calls totaled about $18.5 million across eight transactions of 2,850 contracts each.

Alphabet’s earnings release was scheduled ahead of its 4:30 p.m. ET call. Microsoft planned to release results after the market close and hold a webcast at 5:30 p.m. ET, as listed in TokenPost’s Wednesday earnings schedule.