Airbnb’s (ABNB) Upcoming Earnings Present a ‘Binary’ Opportunity

Core Viewpoint - Airbnb (ABNB) stock has experienced a decline of approximately 11% year-to-date, reflecting a challenging economic environment, which has led institutional investors to be cautious about downside risks [1][6]. Options Flow and Market Sentiment - The options flow indicates a lack of prioritization between bullish and bearish hedging among institutional investors, as evidenced by the volatility skew [2][10]. - Cumulative net trade sentiment for ABNB stock during the first three trading sessions of the month was nearly $2.13 million, with a sentiment drop of $146,100 below parity on a specific day [4][6]. - The largest trades observed were debit-based calls, suggesting that ABNB stock must rise to meet profitability thresholds for these trades to be successful [3][6]. Earnings Report and Trading Parameters - Airbnb is set to release its fourth-quarter earnings report, which is seen as a critical opportunity to improve its stock performance [6]. - The Black-Scholes-derived Expected Move calculator indicates that ABNB stock may trade between $112.85 and $129.77 for the February 13 expiration date, with a 68% probability of staying within this range [8][10]. Trading Strategy - A bull call spread strategy (127/130) is suggested as a binary bet on a positive earnings report, reflecting the modest hedging and potential upside convexity among smart money traders [14][15]. - The current market sentiment shows heightened put activity is expected due to ABNB's poor performance, yet the absence of such activity implies traders are optimistic about the upcoming earnings [16].