U.S. stock futures are pointing toward a negative open this morning ahead of key economic data and another round of corporate earnings.
The Bank of Japan is weighing on sentiment in premarket trading, after the central bank’s latest round of stimulus didn’t go as far as Wall Street was hoping. Later this morning, traders will be greeted with second-quarter U.S. economic growth data.
Against this backdrop, futures on the Dow Jones Industrial Average are off 0.27%, S&P 500 futures are down 0.21%, but Nasdaq-100 futures have added 0.06%.
Options activity held steady on Thursday, with 16.5 million calls and 11.9 million puts changing hands on the session. Calls also remained popular on the CBOE, as the single-session equity put/call volume ratio continued lower, arriving at 0.62. The 10-day moving average, however, advanced for the fifth day in a row to rest at 0.64.
In equity option news, earnings-fueled buying has pushed shares of Apple Inc. (NASDAQ:AAPL) north of their 200-day moving average, but some analysts are concerned that sales growth isn’t being taken into account. Elsewhere, Facebook Inc (NASDAQ:FB) saw a flood of analyst action following its blowout quarterly earnings report, while Amazon.com, Inc. (NASDAQ:AMZN) options traders were cautious heading into this morning’s report.
Apple Inc. (AAPL)
AAPL stock caught the attention of technical traders this week, when the shares pushed past former resistance at their 200-day moving average. Apple stock last tested this long-term trendline in April, but was unable to hold its ground. With some analysts beginning to take a deeper look into Apple’s quarterly report, AAPL stock could see a similar retreat this time around as well.
Specifically, Apple sales fell 15%, iPhone sales were down 23%, sales in China fell 29%, and sales in the Americas were down 6%. In fact, the only sector that saw growth for Apple was services, which rose 19%. Wall Street is also expecting year-over-year declines for next quarter as well.
Like AAPL stock traders, however, options traders are riding the current wave of bullish sentiment. Overall, 1.3 million contracts traded on AAPL yesterday, with calls accounting for a greater-than-usual 68% of the day’s take.
Looking ahead to weekly August 5 series options, the put/call open interest ratio for the series arrives at 0.73, which is up considerably from the current week, as put OI creeps into the picture. AAPL traders should keep an eye on the $105 strike, which is home to peak call OI of 11,605 contracts in the August 5 series.
Facebook Inc. (FB)
Facebook stock received a raft of attention from the brokerage community yesterday. Cheering on the company’s better-than-expected quarterly results, JMP Securities, Goldman Sachs, Canaccord Genuity and Stifel Nicolaus all reiterated FB stock with “buy” or similar ratings and boosted their price targets on the stock.
Even with this wellspring of bullish support, FB stock only added 1.35% yesterday — a far cry from the 10% jump the stock saw immediately following Facebook’s earnings release. The culprit for the disconnect? Chief Financial Officer Dave Wehner stated that Facebook expects lower ad revenue growth in the next two quarters.
Like AAPL options traders, FB traders ignored the potential for declining sales going forward and dove into bullish call options. Overall, some 2.1 million contracts traded on FB stock yesterday, with calls snapping up 64% of the day’s take.
Turning to next week, while the August 5 series $130 strike is currently home to peak call OI for the series (roughly 16,000 contracts), traders should keep watch on the $125 strike, as a rejection here today could lead to a build in OI at this strike going forward.
Amazon.com, Inc. (AMZN)
AMZN stock is looking to push further into record high territory today, as the shares react to yet another record quarterly profit. Specifically, Amazon earned $1.78 per share on revenue of $30.4 billion (up 31% year-over-year). Analysts were expecting a profit of $1.11 a share on revenue of $29.5 billion. That said, a wide range for guidance may limit AMZN’s upside for the time being, with Amazon forecasting operating income for the third quarter of between $50 million and $650 million.
Analysts haven’t been shy about lifting their price targets on AMZN stock. Among those chiming in before the bell include Deutsche Bank (to $985 from $900), Raymond James (to $900 from $770), CLSA Research (to $890 from $770), Pacific Crest (to $847 from $820), Wedbush Securities (to $900 from $835) and J.P. Morgan (to $925 from $908).
AMZN options traders were cautious ahead of the report, with calls only accounting for about 56% of the 377,000 contracts traded on the stock. Turning toward the August 5 series, we find more caution with the put/call OI ratio resting at 1.07.
That said, AMZN stock is set to open north of all major call OI in the weekly and monthly August series — save the 2,150 contracts at the $800 strike — indicating that the shares should have smooth sailing for the time being.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.