U.S. stock futures are pointed higher today, as Wall Street once again makes a run at 20,000 for the Dow Jones Industrial Average. Stocks have entered a light volume holiday drift higher, with the Nasdaq Composite hitting a fresh all-time closing high yesterday. And yet, 20,000 for the Dow appears to be quite the psychological hurdle.
Will today be the day? At last check, futures on the Dow were up 0.15%, with S&P 500 futures adding 0.22% and Nasdaq-100 futures up 0.27%.
On the options front, volume remained anemic due to the fact that many traders remain on extended holiday break. Only about 8.7 million calls and 7.6 million puts changed hands on the session. On the CBOE, the single-session equity put/call volume ratio dipped to a two-week low of 0.62, while the 10-day moving average ticked higher once again to 0.64.
Turning to Tuesday’s volume leaders, Nvidia Corporation (NASDAQ:NVDA) options traders were divided even as the stock surged nearly 7% following bullish comments from Pacific Crest analysts. Elsewhere, Advanced Micro Devices, Inc. (NASDAQ:AMD) also hitched a ride on the semiconductor sector rally amid a flurry of call trading. Finally, Twitter Inc (NYSE:TWTR) calls were also popular after Vetr upgraded the stock.
Nvidia Corporation (NVDA)
Semiconductor makers were hot on Tuesday, following broad bullish comments from analysts at Pacific Crest. However, the brokerage firm zeroed in on Nvidia, stating that virtual reality could provide a “tailwind” for NVDA stock in 2017. That was all it took to put Nvidia stock bulls into a buying mood, extending the shares’ rally to 256% in 2016.
Options traders, however, were less enthusiastic about chasing Tuesday’s NVDA rally. More than 395,000 contracts traded on the stock, but only about 52% of that activity was of the call variety. What’s more, the total January 2017 put/call open interest ratio (which includes all January weekly series) currently rests at a lofty reading of 1.62. With puts easily outnumbering calls among January options, it would seem that speculative traders are calling a top to NVDA stock’s rally.
Advanced Micro Devices, Inc. (AMD)
AMD stock was another participant in yesterday’s semiconductor rally. The shares advanced more than 4% on the day, riding the coattails of Pacific Crest’s broad bullish comments on the sector, with the brokerage firm’s comments on VR providing more than a little boost for Advanced Micro Devices’ outlook among speculators. Currently, AMD is up more than 320% in 2016.
Unlike NVDA options traders, Advanced Micro Devices saw a veritable flood of call options on Tuesday. Some 215,000 contracts crossed the take on AMD stock, with calls snapping up 80% of the day’s take. What’s more, data from Trade-Alert.com highlights two rather bullish large block trades on AMD: 7,926 January 2017 $12 calls traded for the ask of 74 cents, or $74 per contract, and 7,279 January 2017 $12 calls traded for the ask of 80 cents, or $80 per contract.
AMD topped the $12-mark yesterday, and the shares are looking to add to those gains today, with the stock up 1.5% in pre-market activity.
Twitter Inc (TWTR)
TWTR stock received a surprise upgrade on Tuesday, with Vetr lifting the shares from “buy” to “strong buy.” Despite the upgrade, 33 of the 39 analysts following Twitter stock still rate the shares a “hold” or worse according to data from Thomson/First Call. Furthermore, the 12-month consensus price target of $17.02 represents a meager premium of only about 2.46% to Tuesday’s close.
The upgrade provided only a small lift for TWTR stock, with the shares edging 0.67% higher yesterday. Options traders were a little bit more enthusiastic, however, with calls accounting for 60% of the roughly 159,000 contracts traded on Twitter stock. That said, call speculation is running rampant heading into the end of the year, with TWTR’s weekly December 30 series put/call OI ratio resting at 0.47, as calls more than double puts among options set to expire this week.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
