Wednesday’s Vital Data: Apple Inc. (AAPL), Facebook Inc (FB) and Twitter Inc (TWTR)

Advertisement

Wall Street is on its heels this morning, as traders react to a rather alarming quarterly earnings report from Apple Inc. (NASDAQ:AAPL). AAPL stock is down more than 8% premarket, after posting its first quarterly revenue decline in 13 years. Meanwhile, investors will also be hit with the Federal Reserve’s decision on monetary policy after the close this afternoon.

Wednesday’s Vital Data: Apple Inc. (AAPL), Facebook Inc (FB) and Twitter Inc (TWTR)Heading into the open, U.S. stock futures on the Dow Jones Industrial Average are down 0.23%, with S&P 500 futures off 0.26% and Nasdaq-100 futures lower by 1.13%.

Options volume was heavy on Tuesday, rebounding from Monday’s lackluster session. Calls were the contract of choice on the CBOE, as the single-session equity put/call volume ratio plummeted to 0.53, its lowest point since June 2015. The 10-day moving average was dragged lower as a result, arriving at 0.67.

In equity options news, Apple call volume fell off sharply ahead of last night’s poor earnings performance, hinting that many options traders were already concerned about the coming report. Elsewhere, Facebook Inc (NASDAQ:FB) received similar treatment on Tuesday, as call volume dipped well below the norm for FB options activity. Finally, Twitter Inc (NYSE:TWTR) calls were considerably popular, despite what many considered an awful earnings report.

Wednesday’s Vital Options Data: Apple Inc. (AAPL), Facebook Inc (FB), and Twitter Inc (TWTR)

Apple Inc. (AAPL)

After the close last night, Apple reported a 22% drop in profit as revenue and iPhone sales fell for the first time since 2003. But it wasn’t only the iPhone … Apple saw double-digit declines in all of its hardware businesses in the quarter. And if that wasn’t enough, Apple also guided below analysts’ third-quarter expectations.

Ahead of the report, AAPL options traders appeared rather skittish. Typically, call volume accounts for more than 60% of AAPL’s daily option volume, but that figure fell to just 56% on Tuesday. Overall, well over 1.8 million AAPL contracts changed hands, resulting in quite a few new put positions on the stock.

In premarket trading, AAPL is hovering just below$96. If these losses carry over into the open, some 26,900 puts at the weekly April 29 series $100 strike will be trading well in the money. In fact, the next meaningful area of open interest in April is the $95 strike, where more than 17,000 puts are currently open.

Facebook Inc (FB)

Unfortunately for FB stock traders, Facebook is seeing similar options activity ahead of its quarterly report. Facebook stock typically sees call volume in excess of 65% of its daily volume, but yesterday saw that figure drop to just 59%. Total volume came in well above average at 570,000 contracts, but elevated options activity ahead of earnings is to be expected.

Short-term FB call option traders currently have their sights set on the overhead April 29 series $120 strike, with OI totaling roughly 21,000 contracts. On the put side, FB faces 26,800 puts at the $105 strike and 22,500 puts at the $100 strike.

In premarket trading, FB is off slightly, with support emerging near $108.

Twitter Inc (TWTR)

Twitter is in trouble. While earnings and revenue came in higher year-over-year, both figures missed Wall Street’s expectations. What’s more, second-quarter revenue guidance, which Twitter placed between $590 million and $610 million, was nowhere near the $677.57 million the consensus was expecting. Finally, signs continued to show excruciatingly slow active user growth, with monthly active users rising a paltry 3% year-over-year.

Options traders were apparently blindsided by the poor report. Total volume came in at a near-term high of 476,000 contracts, with calls snapping up 67% of the day’s take.

With TWTR poised to open somewhere near $15, the stock is set to trade well below any major call OI in the April 29 series. As for put OI, there are nearly 10,000 contracts at the April $15 strike that could wind up trading in the money before the close on Friday if TWTR’s decline deepens.

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

More From InvestorPlace


Article printed from InvestorPlace Media, https://investorplace.com/2016/04/wednesdays-vital-data-apple-inc-aapl-facebook-inc-fb-and-twitter-inc-twtr/.

©2024 InvestorPlace Media, LLC