Tuesday’s Vital Data: Tesla Motors Inc (TSLA), Home Depot Inc (HD) and Micron Technology, Inc. (MU)

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After diving into the red early in the session, the major market indices extended Friday’s gains to closer broadly higher on Monday. Strong data from the National Association of Homebuilders helped overshadow weak New York manufacturing data and sub-$42 per barrel oil to boost late day buying. On the day, the S&P 500 rose 0.52% to close north of 2,100.

Option volume was thin on Monday, even by summer standards. Overall, the CBOE’s single-session equity put/call volume ratio rose to 0.69, up from Monday’s low, but down from last week’s highs. The 10-day moving average held at 0.76, it’s year-to-date high, for the third-consecutive session.

On the equity options front, Tesla Motors Inc (NASDAQ:TSLA) received a price-target increased at Morgan Stanley, which speculated bullishly on “Tesla Mobility, an app-based, on-demand mobility service.” Meanwhile, Home Depot Inc (NYSE:HD) made a rare appearance on the daily most active options list ahead of the company’s second-quarter earnings report. Finally, Micron Technology, Inc. (NASDAQ:MU) continued to receive mixed ratings from the brokerage community.

Tuesday’s Vital Data: Tesla Motors Inc (TSLA), Home Depot Inc (HD) and Micron Technology, Inc. (MU)

Tesla Motors Inc (TSLA)

TSLA stock jumped nearly 5% on Monday after Morgan Stanley analyst Adam Jones reiterated an “overweight” rating and lifted his price target to $465 from $280. According to Jones, Tesla Mobility should give the company a distinct edge in the self-driving car market, allowing Tesla to start “selling miles” in addition to selling cars.

Option volume was brisk for TSLA stock following the news. More than 256,000 contracts traded on TSLA stock, with 54% of the day’s volume crossing on the call side. Zeroing in on this week’s August option expiration, the $255 strike currently sports call open interest of 3,077 contracts and put OI of 2,056 contracts, setting up a potential point of contention for the stock.  Meanwhile, peak call OI totals 6,730 contracts at the $260 strike, while peak put OI numbers 4,392 contracts at the $240 strike.

Home Depot Inc (HD)

HD stock drew plenty of call activity ahead of last night’s second-quarter earnings report. Overall, 96,532 contracts crossed the tape on HD, with calls accounting for 64% of the take. Peak August OI, which expires at the end of this week, totals 19,007 contracts at the in-the-money $120 call strike, while another 12,202 contracts are open at the $123 call strike.

It appears that calls may have been smart money, as HD stock traded 0.59% higher in afterhours trading last night. Home Depot earnings came in at $1.73 per share, 9% higher than $1.53 per share reported last year. Excluding items, earnings were $1.71 per share, hitting analyst estimates.  

Micron Technology, Inc. (MU)

MU stock continues to be a sore point for shareholders, with the equity shedding more than half its value so far in 2015. The situation didn’t get any clearer on Monday, with the stock receiving both a bullish reiteration and a downgrade. Specifically, Deutsche Bank reiterated its “buy” rating and $28 price target on MU, citing “optimistic business cycles.”  

However, Wedbush downgraded MU stock to “neutral” from “outperform” while cutting its price target to $19 from $26. According to Wedbush, “DRAM supply/demand likely won’t improve and cost downs won’t outpace ASP declines until mid-2016.”

Despite the negativity, calls dominated options activity for MU on Monday. Overall, 164,549 contracts traded on the stock, with call options accounting for 69% of the day’s volume. Peak August OI for MU currently totals 100,530 contracts at the out-of-the-money $19 strike, while peak put OI pales in comparison, numbering just 21,074 contracts at the out-of-the-money $16 strike.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/08/tuesdays-vital-data-tesla-motors-inc-tsla-home-depot-inc-hd-micron-technology-inc-mu-options/.

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