The market is poised for a critical moment as tech giants Alphabet and Microsoft prepare to release their earnings reports. Microsoft is trading just under its record high, while Alphabet is experiencing a notable decline, down 20% from its peak in May, raising concerns about its performance.
Options data indicates that market-makers expect a 5.8% price movement for Alphabet following its earnings, which is significantly higher than Microsoft's anticipated move of under 5%. This is particularly relevant given that Microsoft's average price swing over the past two years has been 6%, while Alphabet's has been 2.7%.
The options market shows a growing interest in puts for both stocks, but the overall sentiment remains bullish, with more calls than puts traded in the past year. Specifically, Alphabet saw substantial call buying, particularly at the 360-strike for January expiry, indicating strong bullish sentiment among traders.
This divergence in performance and expectations between the two companies could have broader implications for the tech sector and the overall market, making their earnings reports critical to watch