U.S. stock futures are trading higher this morning, as Wall Street hopes for a strong January nonfarms payroll report. Expectations are for 175,000 jobs added on the month and an unemployment rate of 4.7%. Additionally, the financial sector is seeing activity as the Trump administration promises to scale back the Dodd-Frank Act that was enacted in the wake of the 2008 financial crisis.
Heading into the open, futures on the Dow Jones Industrial Average were up 0.46%, S&P 500 futures had gained 0.44% and Nasdaq-100 futures were higher by 0.31%.
On the options front, volume arrived a touch below average on Thursday, with about 14.7 million calls and 12.1 million puts changing hands. On the CBOE, the single-session equity put/call volume ratio slipped to 0.61 while the 10-day moving average held at a three-month high of 0.69.
Turning to Thursday’s volume leaders, Amazon.com, Inc. (NASDAQ:AMZN) saw a rise in put activity ahead of last night’s quarterly report that may have been smart money, as AMZN stock is down roughly 4% in premarket trading. Elsewhere, Nvidia Corporation (NASDAQ:NVDA) calls were active after RBC Capital Markets lifted their price target on the shares. Finally, Twitter Inc (NYSE:TWTR) call volume soared on earnings speculation as the looming Snap IPO drew attention to the social media sector.
Amazon.com, Inc. (AMZN)
After the close last night, Amazon reported a fourth-quarter profit of $1.54 on revenue of $43.74 billion.
Earnings were 12 cents better than the consensus estimate of $1.42 per share, but sales missed the Street’s target of $44.69 billion. Adding to AMZN’s woes was weaker-than-expected guidance first-quarter guidance, with Amazon expecting revenue in a range of $33.25 billion to $35.75 billion, versus the consensus view of $36 billion.
Apparently feeling that there was a bit too much hype in the air ahead of the event, AMZN options traders favored puts in the run up to earnings. Volume yesterday rose to 416,000 contracts, with puts accounting for 52% of the day’s take.
Currently, peak 3 Feb open interest totals more than 5,000 contracts at the $800 strike, with AMZN set to open just north of support in the region. An additional 4,400 puts are open at the 3 Feb $790 strike, though selling pressure would have to kick up significantly for AMZN to approach that level in today’s trading.
Nvidia Corporation (NVDA)
With earnings slated for Thursday next week, Nvidia received another confidence boost yesterday. RBC Capital Markets reiterated its outperform rating on NVDA stock and lifted its price target to $124 from $115. “Our analysis suggests that total Data Center revenue growth could come in closer to 100% (Street at 40%) this year,” the brokerage firm said in a research note.
Nvidia is expected to post a fourth-quarter profit of 84 cents per share next week, on revenue of $2.11 billion.
While NVDA stock is off its December highs, options traders appear ready for the rally to resume once again. On Thursday, more than 235,000 contracts traded on NVDA stock, with calls snapping up 67% of the day’s take.
Speculative traders currently have their sights set on the 10 Feb. $120 strike, where peak call open interest of 1,800 contracts currently resides. The $120 area is home to NVDA’s December highs, and a breakout above this area following earnings could be a major coup for Nvidia stock bulls.
Twitter Inc (TWTR)
Snap Inc., maker of the widely popular Snapchat mobile app, is preparing for an IPO and the news has brought many comparisons to Twitter’s much-maligned offering. Not surprisingly, the added attention has provided a lift for TWTR stock ahead of next week’s quarterly earnings report.
Twitter, the “always a bridesmaid but never a bride” takeover target, is expected to post a profit of 12 cents per share on revenue of $736.98 million on Thursday next week, and options activity suggests that TWTR traders are anticipating a rally.
In Thursday’s trading, TWTR stock saw volume jump to 203,000 contracts, with calls gobbling up 76% of the day’s take. TWTR bulls have their sights set firmly on the $18 strike in the 10 Feb series, where peak OI of nearly 6,300 contracts currently resides. The next most popular call strike in the series is the $17.50 strike. TWTR hasn’t traded north of $18 since mid-December.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.