Tuesday’s Vital Data: Apple Inc. (AAPL), Netflix, Inc. (NFLX) and Yahoo! Inc. (YHOO)

Advertisement

U.S. stock futures are pointed broadly lower this morning, as Wall Street uses earnings as an excuse to take profits following a string of record highs for stocks. Mixed in with today’s flood of corporate earnings reports will be June housing starts and building permits, slated for release ahead of the open.

stock market todayAgainst this backdrop, futures on the Dow Jones Industrial Average are down 0.34%, while futures on the S&P 500 have shed 0.33% and Nasdaq-100 futures have dropped 0.29%.

Options activity fell off sharply on Monday, but remained just above the average for the past three weeks, as 13.8 million calls and 10.1 million puts crossed the tape.

While calls remained in favor, the CBOE single-session equity put/call volume ratio whipsawed from a three-month low of 0.52 to a two-week high at 0.69. The 10-day moving average also reversed course, edging higher to 0.61.

In equity option news, Credit Suisse offered up bullish commentary on Apple Inc.’s (NASDAQ:AAPL) iPhone growth and revenue, while Netflix, Inc. (NASDAQ:NFLX) reported solid earnings with flat subscriber growth. Finally, Yahoo! Inc. (NASDAQ:YHOO) reported disappointing quarterly earnings, but said nothing about the auction of its core internet business.

Tuesday’s Vital options Data: Apple Inc. (AAPL), Netflix, Inc. (NFLX) and Yahoo! Inc. (YHOO)

Apple Inc. (AAPL)

Credit Suisse remained bullish on Apple heading into next week’s quarterly earnings report. According to the brokerage firm, Apple has “tangible fortune ahead” due to high iPhone retention rates. Credit Suisse believes that “the iPhone SE strength should offset the weakness in the rest of the iPhone portfolio,” and that even with a “subdued iPhone cycle for the new few quarters … the iPhone business will recover” and accelerate.

AAPL options traders appeared to take the bullish commentary to heart, with calls accounting for an above-average 66% of yesterday’s 919,000 contracts in total volume. In fact, short-term call open interest continues to rise for AAPL, as the weekly July 29 series put/call open interest ratio has steadily declined from a perch near 0.90 to its current reading of 0.70, as calls are added at a faster rate than puts. Expect this trend to continue heading into next week’s quarterly report.

Netflix, Inc. (NFLX)

In terms of earnings, Netflix came out strong in the second quarter. The company posted in-line revenue of $2.11 billion on earnings of nine cents per share — well ahead of the consensus expectations for three cents per share. However, domestic subscriber growth ground to a halt, adding only 160,000 versus expectations for 509,000 added. International growth was also lackluster, with 1.52 million added versus 2.15 million per the consensus.

NFLX stock traders are taking the sub-growth figures pretty hard, with the stock down over 13% in premarket trading.

Options traders were suspicious heading into the report. Activity on Monday showed that the 704,000 contracts traded on NFLX were split evenly between puts and calls. If NFLX’s decline carries over into the regular session, the stock will open below all major call open interest accumulations, with only a pair of major put strikes left for potential support. Currently, NFLX is hovering above 4,132 puts at the weekly July 22 $86 strike and 6,476 puts at the $85 strike.

Yahoo! Inc. (YHOO)

Yahoo! reported second-quarter revenue of $1.31 billion, that only beat expectations of $1.24 billion due to changes in reporting on its Microsoft Corporation (NASDAQ:MSFT) search deal — otherwise, revenue was down 15%. Furthermore, Yahoo reported a loss of 46 cents per share, versus a loss of two cents per share last year.

But traders weren’t really interested in Yahoo’s quarterly report, waiting instead for news on the ongoing auction for Yahoo’s core internet business … on which the company has been silent.

As expected, options activity ahead of earnings and auction news was neatly divided. Calls managed to snap up 51% of the 214,000 contracts traded on Monday, though much of that activity was likely arbitrage related, holding little bullish bias.

Calls hold an equally slim lead in terms of OI in the weekly July 22 series, with a put/call OI ratio of 0.92. Call traders have staked a claim at $40, with 18,000 contracts open here in the July 22 series, while put traders have opened up 14,500 contracts at the $36 strike.

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/2016/07/tuesdays-vital-data-apple-inc-aapl-netflix-inc-nflx-yahoo-inc-yhoo/.

©2024 InvestorPlace Media, LLC