U.S. stock futures are bouncing around breakeven this morning, as Wall Street remains indecisive ahead of Friday’s speech by Federal Reserve Chair Janet Yellen. In fact, there is so much Fed chatter on the Street right now, you’d think Friday was a monetary policy meeting.
But, with hawkish rhetoric ramping up from Fed presidents in the past week, investors are digging for any definite clues as to the possibility of an interest rate hike.
At last check, futures remained indecisive, Dow Jones Industrial Average futures 0.03%, and S&P 500 futures and Nasdaq-100 futures up by 0.06%.
Options activity remained below average on Tuesday, with only about 11.9 million calls and 10.9 million puts crossing the tape in total. But while put and call volumes are nearing parity on the broader exchanges, calls remain in charge on the CBOE. Specifically, the single-session equity put/call volume ratio dipped to 0.59, sending the 10-day moving average a notch lower to 0.59.
Providing drive for Tuesday’s options activity, Advanced Micro Devices, Inc. (NASDAQ:AMD) continues to see follow-through options activity after announcing a milestone for its Zen processor core. Meanwhile, Best Buy Co Inc (NYSE:BBY) soared following better-than-expected second-quarter earnings, and Tesla Motors Inc (NASDAQ:TSLA) claimed the title of the world’s’ fastest production car with a new, more efficient battery pack.
Advanced Micro Devices, Inc. (AMD)
AMD stock jumped more than 8% on Friday, retraced some of those gains on Monday, and jumped another 1.16% on Tuesday as investors digested the company’s latest new on its Zen processing core.
According to Advanced Micro Devices, the Zen core achieved a 40% improvement in instructions-per-clock versus previous versions — a significant leap forward for the company. The upside breakout for AMD stock was also driven by technical buyers, who jumped on the stock’s breach of the $7 region — an area that has capped AMD since 2012.
On Tuesday, options volume soared to a near-term record for AMD, as more than 378,000 contracts crossed the tape. What’s more, calls accounted for an impressive 92% of the day’s take. Zeroing in on specific block trades, Trade-Alert.com reports that a block of 80,320 January 2017 $9 strike calls traded for the ask of 84 cents, or $84 per contract, yesterday. This block was marked spread, though the block size didn’t match up exactly with the 66,934 contract block of calls that traded at the same time on the January 2017 $6 strike for the bid of $2.10.
While this appears to be some sort of bearish-to-neutral credit spread, it difficult to tell exactly without more information.
Best Buy Co Inc (BBY)
Best Buy blew the doors off with its second-quarter earnings report yesterday. The company said it earned 57 cents per share on sales of $8.53 billion, breezing past expectations for 43 cents per share on revenue of $8.4 billion. Best Buy also noted that same-store sales rose 0.8% on the quarter, versus Wall Street’s expectations for a 0.6% decline. What’s more, the retailer set third-quarter earnings at 43 cents to 47 cents per share, versus the consensus target for 45 cents.
BBY stock surged nearly 20% following the report, putting the shares within striking distance of $40. However, options traders were not quite as enthusiastic. Total volume rose to 250,000 contracts — a near-term high — though calls only accounted for about 55% of the day’s take.
As you might expect, BBY is now trading north of all major call OI strikes, save about 5,000 contracts at the $40 strike in the October series. These October $40 calls were last asked at $1.22, or $122 per contracts.
Tesla Motors Inc (TSLA)
Tesla announced a new battery pack yesterday, one that extends the range on the Model S P100D from 294 miles to 315 miles. The battery is also available on the Model X. While the extended range is certainly something to crow about, the new battery also provided a speed boost for the P100D, with the vehicle now able to go from zero to 60 in 2.5 seconds, making the P100D the fastest production car in the world.
TSLA stock rose a mere 0.84% following the news, and options traders were only moderately more excited. Total volume arrived at 205,000 contracts, with calls snapping up 63% of the day’s take.
TSLA continues to consolidate into the $225 region, bound by its 10-day and 20-day moving averages on the upside and its 50-day and 200-day moving averages on the downside. Call traders appear to be anticipating an upside breakout soon, as nearly 13,000 calls are currently open at the $250 strike in the September series. By comparison, peak put OI for September numbers nearly 14,000 contracts at the $200 strike.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
