BlackRock (BLK) Stock Analysis 2025: Bearish Option Traders Ahead of Q3 Earnings, Price Forecast & Volatility Insights

Put Options Lead Open Interest as Investors Brace for BlackRock's Earnings

As BlackRock, Inc. (BLK) approaches its fiscal third-quarter earnings report in 2024, market sentiment appears cautious. Option traders have shown a clear preference for put options over calls, with puts outnumbering calls by more than two-to-one in open interest. This unusual activity suggests a prevailing expectation of a negative earnings surprise that could trigger a downward price trend.

Currently, the open interest is heavily skewed toward puts, and option premiums are elevated, reflecting heightened uncertainty. Traders are actively buying puts and selling calls, positioning themselves for a potential drop in BlackRock's share price. Should this bearish sentiment reverse unexpectedly, it may lead to a swift upward correction in the stock price.

Predicting post-earnings stock movements is inherently challenging. However, historical option activity combined with price trends indicates that a positive earnings report could propel BlackRock's shares closer to its 20-day moving average, reversing the prevailing downtrend. This scenario is plausible because current option pricing factors in a bearish outlook, so any favorable news could surprise the market and trigger a rapid price increase.

Key Highlights

• Investor sentiment has driven BlackRock's share price down ahead of earnings.
• The stock has consistently closed below its 20-day moving average over the past month.
• Option pricing signals a stronger likelihood of downside movement.
• Volatility-based support and resistance levels suggest potential for significant upside.
• Traders may find opportunities to profit from unexpected earnings outcomes.

Technical analysis reveals that BlackRock's shares have been on a downward trajectory, with the highest price around $915 in mid-September and a low near $825 in early October. The 20-day Keltner Channel indicators, which use the Average True Range (ATR) to gauge volatility, illustrate that the stock price has remained below its moving average, reflecting waning investor confidence as earnings approach.

Understanding ATR and Keltner Channels

The Average True Range (ATR) is a widely used metric to measure historical volatility, typically calculated over 10 to 20 trading periods (about two to four weeks). The Keltner Channel uses this data to create upper and lower bands around a moving average, helping traders visualize price volatility and potential support and resistance zones.

In BlackRock's case, the persistent close below the 20-day moving average signals growing pessimism among investors. Notably, the stock appears to have established a new support level in the week leading up to earnings, making it crucial to assess whether this reflects expectations of positive or negative results.

Option Market Activity

Recent option trading data shows a slight preference for calls over puts on the surface, with nearly 3,000 calls traded compared to over 2,300 puts on a recent Monday. This could indicate some bullish sentiment. However, open interest tells a different story: over 47,000 puts versus 19,000 calls, highlighting a stronger bearish bias overall.

The option pricing charts reveal a close range between call and put strike prices, with the probability of the stock closing within the call price range at 38% and within the put range at 34% post-earnings. This balance suggests that while traders lean bearish, there is still significant uncertainty, and the stock could move sharply in either direction.

The 10-day Keltner Channel set at four times the ATR highlights key support and resistance levels that have historically correlated with price reversals. These technical markers indicate that BlackRock's shares have substantial room to move, with a slightly greater potential upside than downside.

Potential Market Impact

Although BlackRock is not a bank, its status as the world's largest asset manager means its earnings report can influence the broader financial sector and market indexes. A strong earnings surprise could boost related stocks like Blackstone Inc. (BX) and Brookfield Asset Management Inc. (BAM), as well as financial ETFs such as State Street's S&P 500 Index ETF (SPY), Schwab's U.S. Dividend Equity ETF (SCHD), and State Street's Financial Sector ETF (XLF).

Investors should prepare for heightened volatility following the earnings release, as past reports have caused significant price swings. The current option market setup presents an opportunity for traders to capitalize on unexpected earnings results, whether positive or negative.

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