Options Bulls Pounce on Fintech Stock Before Earnings

DLocal Limited (NASDAQ:DLO) will report third-quarter earnings Thursday, Nov. 12, after the market closes. Zacks Consensus Estimates call for an earnings 22 cents per share on revenue of $412.07 million, representing year-over-year increases of 29.4% and 45.9%, respectively.

DLO was last seen up 0.9% at $163.50, testing familiar support at the $14 level after a rebound from $13. Short interest is also quite high ahead of the report. The 17.39 million shares sold short account for 20.90% of DLO's available float, leaving plenty of room for a short squeeze. 

DLocal has a mostly negative post-earnings history, however. Looking back at the last 12 quarterly reports, the stock finished its next session higher just five times, averaging a 3.2% loss over this period. This time around, the options pits are pricing in a 11.7% post-earnings move, regardless of direction. 

Options traders have been extremely optimistic ahead of the report, however. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), DLO's 10-day call/put volume ratio of 58.81 ranks in the 90th percentile of its annual range. 

It's also worth noting that DLO tends to underperform options traders' volatility expectations. This is per its Schaeffer's Volatility Scorecard (SVS) of 6 out of 100, could hint at the fintech stock being a premium-selling candidate.