Kroger Stock Volatile Ahead of Q3 Earnings

KR -1.24% CBOE -0.18%

Grocery powerhouse Kroger Co (NYSE:KR) is down 1.4% to trade at $66.61 this afternoon, as investors gear up for the company's third-quarter results, due out before the open Thursday. KR has been struggling on the charts, with overhead resistance stemming from the formerly supportive 100-day moving average. The equity recently slipped below its quarterly breakeven mark, but more volatility could be on the way with earnings around the corner.

Kroger stock has an upbeat post-earnings history, finishing higher after seven of its last eight reports. Spanning two years, the shares have averaged a post-earnings move of 4.4%, regardless of direction, with analysts expecting a larger-than-usual 8.1% swing for Thursday's trading.

Calls having been popular for Kroger stock. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), KR’s 10-day call/put volume ratio of 3.73 sits in the 78th annual percentile.

Echoing this, the grocery stock's Schaeffer's put/call open interest ratio (SOIR) of 0.46 sits in the 18th percentile of its annual range. Should this bullish sentiment begin to unwind, it could trigger more headwinds for the shares.

Meanwhile, short interest is on rise, up 11.9% during the most recent reporting period. The 28.79 million shares account for 4.75% of the stock’s available float, or four days' worth of pent-up buying power.

With this backdrop in mind, a premium-selling strategy could be the move going forward, as Kroger stock's Schaeffer's Volatility Scorecard (SVS) checks in at 12 out of 100. This means the security has consistently realized lower volatility than its options have priced in.