Wall Street was apprehensive on Tuesday, as the major market indices fell across the board ahead of a slew of key quarterly earnings reports. The Dow Jones Industrial Average was the hardest hit, shedding 1%, while the S&P 500 dipped 0.43%.
Options volume was brisk, with contracts flying on tech darling Apple Inc. (NASDAQ:AAPL) ahead of last night’s quarterly report. On the day, the single-session CBOE equity put/call volume ratio jumped to 0.69, while the 10-day moving average continued lower to 0.66.
Joining Apple on the most active options listing were Microsoft Corporation (NASDAQ:MSFT) and Yahoo! Inc. (NASDAQ:YHOO), which were both on tap to release their quarterly earnings reports. With stock futures down across the board heading into the open, you can be sure the news wasn’t well received.
Apple Inc. (AAPL)
AAPL stock maintained its perch atop the most actives listing on Tuesday, with volume hitting a near-term peak of 1.6 million contracts. Calls were on the menu, accounting for 63% of the day’s activity. However, with Apple stock down a whopping 6.5% in pre-market trading, puts would appear to have been the smart money.
Overall, Apple’s third-quarter earnings of $10.7 billion and revenue of $49.6 billion were enough to edge out Wall Street’s expectations. However, the figures fell shy of Apple’s whisper number, and iPhone 6 sales 0f 47.5 million units whiffed the consensus expectation for sales of 50 million units.
With AAPL stock down sharply in premarket trading, the stock is now hovering just above key support at $120 and its 200-day moving average. Apple also is trading below all major call accumulations in the weekly July 24 series, while heavy put open interest of 21,119 contracts still rests just below the shares at the $120 strike.
Microsoft Corporation (MSFT)
MSFT stock also finds itself in a bind this morning, with the shares shedding nearly 4% in the wake of a poorly received fiscal fourth-quarter earnings report. Microsoft actually topped Wall Street’s fourth-quarter expectations, posting a profit of 62 cents per share on revenue of $22.2 billion (versus targets for 56 cents and $22 billion, respectively). However, a continued decline in Windows revenue, and a slowdown in Windows Phone revenue was more than enough to give traders the jitters.
Heading into the report, traders sent some 345,000 options contracts across the tape on MSFT stock. Calls were the most popular, accounting for 67% of Tuesday’s total volume. In premarket trading, MSFT stock is hovering near the $45.50 mark — an area that is home to 2,065 call contracts and 5,465 put contracts in the weekly July 24 series. Peak put open interest, meanwhile totals 7,493 contracts at the $45 strike.
Yahoo! Inc. (YHOO)
Finally, we turn to YHOO stock, which is down more than 2% pre-market after the company showed solid revenue growth at the expense of earnings. In fact, Yahoo! revenue rose 15%, making its biggest year-over-year jump in nearly nine years. But that growth came at a sizable cost as earnings fell to a loss of 2 cents per share. On an adjusted basis, earnings fell to 16 cents per share, missing Wall Street’s target of 18 cents per share.
Heading into the report, option volume swelled to 137,843 contracts on YHOO, with calls making up 64% of Tuesday’s activity. YHOO is currently trading down near $38.75, placing focus on the weekly July 24 series $38 and $38.50 put strikes, which sport open interest of 8,493 contracts and 4,479 contracts, respectively.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.