Wall Street ended mixed on Tuesday, with the Dow Jones Industrial Average rising 0.4% while the Nasdaq dipped 0.1% into the red. The S&P 500 split the difference with a gain of 0.28%. Earnings activity remains at the forefront of drivers for traders, and options activity is starting to lean towards the put end of the spectrum. In fact, the CBOE’s put/call volume ratio edged higher once again, arriving at 0.64, while the 10-day moving average finished at 0.63.
Taking a look at Tuesday’s most actively traded stocks in the options pits, Twitter Inc (NYSE:TWTR) attracted a wealth of call volume as investors looked for a potential rebound from yesterday’s earnings-induced 18% drubbing. Elsewhere, shares of Ford Motor Company (NYSE:F) offered a lukewarm reception to the automaker’s quarterly report, but that didn’t stop options traders from pushing volume to short-term record levels.
Finally, American Airlines Group Inc (NASDAQ:AAL) trended lower after its quarter earnings report, but the stock still saw healthy call volume ahead of the company’s ex-dividend date tomorrow.
Let’s take a closer look at the important news and data behind this activity in TWTR, F and AAL.
Twitter Inc (TWTR)
Shares of social media firm Twitter were hammered for an 18% loss on Tuesday, after the company’s first-quarter results were leaked prior to the official announcement. Earnings of 7 cents per share topped estimates for 4 cents per share, but revenue of $436 million came in well shy of the consensus target of $456 million. Furthermore, full-year guidance also missed expectations, with Twitter seeing revenue of $2.17 billion to $2.27 billion compared to Wall Street’s target of $2.37 billion. Poor ad sales and direct marketing initiatives were blamed.
The decline didn’t slow enthusiasm in the options pits, however. On the day, some 482,095 contracts were traded on TWTR stock, pushing volume well above the stock’s near-term daily average.
Overall, some 65% of Tuesday’s activity traded on the call side, with the now deep-out-of-the-money weekly May 1 series $51.50 call the most popular with open interest of 25,717 contracts. In the monthly May series, however, peak open interest resides at the in-the-money $47 put, totaling 32,039 contracts.
Ford Motor Company (F)
Ford Motor stock added roughly 1% on Tuesday, despite quarterly earnings arriving just shy of Wall Street’s targets. For the quarter, Ford posted a profit of 23 cents per share on revenue of $33.9 billion. Wall Street was expecting earnings of 25 cents per share on $33.9 billion in revenue. North America was a bright spot, with positive operating margins of 6.7% and $20 billion in revenue, though South America was a drag, at negative 12.5% operating margin and $1.5 billion in revenue.
Options traders appeared overwhelmingly hopeful in the wake of the report. F stock saw above average volume of 332,059 contracts trade on Tuesday, with 89% of that activity crossing on the call side of the tape. Looking ahead to monthly May open interest, roughly 56,000 contracts reside at both the overhead May $17 and $20 call strikes, while some 58,080 contracts reside at the May 20 put.
In premarket activity, F stock is giving back some of yesterday’s gains, slipping 0.75% at last check.
American Airlines Group Inc (AAL)
Shares of American Airlines slipped 1.3% yesterday in response to the company’s middling first-quarter earnings report. The company saw revenue dip 2% to $9.83 billion, while earnings came in at $1.73 per share, topping the consensus estimate of $1.71 per share.
Despite the weakness calls were the investment vehicle of choice for AAL traders, with many looking to take advantage of tomorrow’s ex-dividend date. With 111,969 contracts trading on AAL stock, some 82% of the session’s activity crossed on the call side.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
