U.S. stock futures are mixed heading into the open this morning, as August opens amid waning expectations for a Federal Reserve rate hike any time soon.
After last week’s slow economic growth data, expectations for a near-term rate hike from the Federal Reserve fell to 12%, according to data from CME Group.
Speaking of economic data, the July Markit manufacturing purchasing managers’ index and July Institute for Supply Management’s manufacturing index are both on the docket today.
Against this backdrop, futures on the Dow Jones Industrial Average are off 0.13%, while S&P 500 futures have added 0.16% and Nasdaq-100 futures are up 0.14%.
Options activity was up sharply on Friday, as traders exited July positions and re-assessed their take on market and stock direction for August. Overall, 16.5 million calls and 13.6 million puts crossed the tape on Friday. Over on the CBOE, single-session equity put/call volume ratio held at 0.62, while the 10-day moving average advanced for the sixth day in a row to rest at 0.65.
In equity option news, Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) saw a surge in call options volume after the company blew past both the consensus earnings estimates and the “whisper number.” Meanwhile, Tesla Motors Inc (NASDAQ:TSLA) saw a rise in options activity ahead of this week’s second-quarter earnings report. Finally, Exxon Mobil Corporation (NYSE:XOM) was smacked with heavy put volume as second-quarter revenue fell 22% year-over-year.
Alphabet Inc (GOOG, GOOGL)
GOOGL stock spiked nearly 3.5% on Friday, with the shares briefly eclipsing the $800 mark following Alphabet’s impressive second-quarter earnings report. By the numbers, Alphabet said it earned $8.42 per share on revenue of $21.5 billion, compared to expectations for earnings of $8.06 per share on sales of $20.64 billion. The whisper number rested at $8.20, according to EarningsWhispers.com.
Options traders pushed volume on GOOGL stock to more than 229,000 contracts — a short-term high for the security. What’s more, calls accounted for 60% of the day’s take, helping to push GOOGL’s August put/call open interest ratio low to 0.86 from nearly 0.90 earlier last week.
Naturally, options traders are focused heavily on the $800 strike for GOOGL, with peak August OI of 2,080 contracts currently open at this front-month strike. Another roughly 1,400 call contracts are also open at the overhead $810, $820, and $830 contracts in the August series. Should GOOGL manage to break out above $800, these strikes could fall in quick succession over the short-term.
Tesla Motors Inc (TSLA)
Electric car manufacturer Tesla Motors steps into the earnings confessional after the close of trading this Wednesday. Analysts are expecting a loss of 52 cents per share on revenue of $1.63 billion. The whisper number comes in at a wider loss of 56 cents per share, according to EarningsWhispers.com.
Tesla will also be under scrutiny for its acquisition of SolarCity Corp (NASDAQ:SCTY), which Tesla announced this morning it had reached a deal to buy for $2.6 billion — combining both Elon Musk-helmed firms.
Options traders appear to be cautiously optimistic ahead of the report, with calls snapping up 58% of the more than 245,000 contracts traded on TSLA stock on Friday. Turning to weekly August 5 series options, the put/call OI ratio for this volatile weekly series comes in at 0.80, with call OI rising slightly during the past week. Weekly August implieds are pricing in a potential post-earnings move of about 8% for TSLA.
Exxon Mobil Corporation (XOM)
Shares in oil baron Exxon Mobil were smacked for a loss of 1.39% on Friday after the company posted a 60% decline in second-quarter profit. For the record, Exxon reported a profit of 41 cents per share on revenue of $57.69 billion. Analysts were looking for earnings of 64 cents per share on sales of $60.64 billion. Exxon said the results reflected a volatile market.
Options traders responded with puts, as these typically bearish bets made up 59% of Fridays total volume of 393,000 contracts. Overall, the August/September put/call open interest ratio for Exxon Mobil has risen steadily over the past several trading sessions, culminating in a perch of 1.01 following Friday’s earnings reaction.
XOM stock is now trading well below all major August put OI strikes, save the nearly 30,000 put contracts currently open at the $85 strike.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
