Some companies reporting this week are primed for stronger-than-expected results which could boost their stock, according to Bank of America. The bank screened Russell 1000 names that are slated to post their numbers this week and meet the following criteria: How cheap their call options are How low is their implied volatility The stock is heavily shorted and/or lightly owned by investors BofA also has a higher earnings estimate than the Wall Street consensus for these stocks. In other words, BofA thinks they may surprise. “We go beyond the frequently cited implied moves (the size of the earnings reaction implied by option markets) and rely on historical option costs and post-earnings reactions, proprietary positioning metrics, and this quarter’s BofA EPS estimates from our fundamental equity research analysts,” BofA analysts led by Gonzalo Asis wrote. In its simplest form, a call option allows a trader to buy a specific security at an already set price in a predetermined time period. If the underlying security rises in the allotted time, the call option’s value increases. These instruments can also be a good way for investors to navigate the earnings season without taking on too much risk. They can also be used to gauge potential earnings surprises, like BofA did. Here’s a look at some of the names that made Bank of America’s list: Both Under Armour and Rivian have higher implied moves compared to peers on the list of 12.1% and 12.3%, respectively. Under Armour has 5.8% short interest while Rivian maintains 18.6%, the note said. Under Armour stock has slipped roughly 23% this year, while Rivian has added 37%. UAA YTD mountain Under Armour in 2023 Under Armour will report fiscal first-quarter results Tuesday before the opening bell. Analysts polled by FactSet are forecasting a quarterly loss of 2 cents per share. Rivian, meanwhile, will report second quarter results after the closing bell on Tuesday, with a forecasted adjusted loss of $1.43 per share according to FactSet. Elsewhere, Wynn Resorts has an implied move of 3.4%, according to BofA, compared to an implied volatility score of -2.42 and 6% short interest. The stock has added more than 26% year to date. WYNN YTD mountain Wynn Resorts year to date The resort giant will report quarterly results on Wednesday after the closing bell, and analysts polled by FactSet are expected an adjusted 64 cents per share. — CNBC’s Michael Bloom contributed to this report.
