U.S. stock futures are pointing toward a lower open this morning, as China’s massive cash injection failed to keep Asian indices out of the red. The move was China’s most aggressive ever, as officials moved to stem a potential exodus ahead of a weeklong break for the Lunar New Year holiday.
Heading into the open, futures on the Nasdaq Composite are down 0.45%, S&P 500 futures are off 0.5% and Dow Jones Industrial Average futures are 0.57% lower.
In options activity, volume remained brisk amid a rising tide of corporate quarterly earnings reports. Over on the CBOE, the single-session equity put/call volume ratio slipped for a second straight session, falling to 0.59 after hitting a year-to-date high of 1.14 on Monday. The 10-day moving average, meanwhile, held at 0.85.
In equity option news, General Electric Company (NYSE:GE) saw a surge in call volume heading into tomorrow’s quarterly earnings report. Meanwhile, Citigroup Inc’s (NYSE:C) earnings estimates were trimmed at Wells Fargo, which sees continued pressures on credit costs. Finally, Micron Technology, Inc. (NASDAQ:MU) was hit hard in the wake of Advanced Micro Devices Inc.’s (NASDAQ:AMD) warnings on weak demand in China.
General Electric Company (GE)
GE will release its fourth-quarter earnings report ahead of the open tomorrow morning, and options traders appear to be bargain hunting ahead of the event. On Wednesday, GE saw total option volume come in at more than 731,000 contracts, well above average for the past couple of weeks. What’s more, calls dominated GE’s options pits, accounting for 84% of the day’s take.
GE is currently expected to post a profit of 50 cents per share on revenue of about $36 billion. The stock has had a rough start to 2016, and there may be some upside for the shares in the wake of a positive report. Open interest levels of note this week include the Jan 22 series $29 strike call, where 3,879 contracts are open, and the $27 put, which sports OI of 7,729 contracts.
For a closer look at GE earnings, sentiment and potential trading ideas, check out my piece from yesterday.
Citigroup Inc (C)
Citigroup shares shares shed 3.45% yesterday, briefly eclipsing support at $40, after Wells Fargo cut its earnings estimates for the banking giant. According to Wells Fargo, global economic pressures are not going to ease soon, and Citigroup will face continued credit cost pressures. As a result, the brokerage firm cut its 2016 estimates to $5.15 per share from $5.65, and its 2017 earnings estimate to $5.90 from $6.24.
Citigroup options traders appeared to take the news in stride, with call volume holding near average levels for C stock. Total volume arrived at roughly 478,000 contracts, with calls snagging 58% of the overall take.
Levels to watch for C in the options pits include the out-of-the-money weekly Jan 29 series $42 call, where 7,214 contracts are currently open, and the deep in-the-money $49 put, which sports OI of 7,434 contracts.
Micron Technology, Inc. (MU)
MU shares plunged nearly 7% on Wednesday, as the stock suffered in sympathy with fellow semiconductor concern AMD. Advanced Micro Devices posted a 14% year-over-year drop in quarterly earnings and warned that the chips sector was facing significant headwinds due to falling demand in China. Industry leader Intel Corporation (NASDAQ:INTC) has also warned of slackening demand, creating additional pressure for MU.
Options traders unsurprisingly turned to MU puts on Wednesday. Overall volume arrived at 293,072 contracts for the semiconductor concern, with puts snatching up 55% of the overall take.
As for levels to watch, the $9.50 strike is home to peak put OI of 11,653 contracts in the weekly Jan 29 series, as options traders look to find a bottom for struggling MU shares. Peak call OI for the series, meanwhile, numbers 4,562 contracts at the out-of-the-money $14.50 strike.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
