U.S. stock futures are flat to higher this morning, as Wall Street digests another heavy helping of corporate earnings, with Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc (NASDAQ:GOOGL) and Amazon.com, Inc. (NASDAQ:AMZN) headlining last night’s after hours reports. Meanwhile, a potential government shutdown looms this weekend, as government funding expires at midnight on Saturday.
Heading into the open, futures on the Dow Jones Industrial Average are up 0.01%, S&P 500 futures have added 0.08% and Nasdaq-100 futures have gained 0.06%.
On the options front, volume came in a touch higher than average for the past three weeks on Thursday. Overall, about 15.5 million calls and 13.1 million puts crossed the tape on the session. On the CBOE, the single-session equity put/call volume ratio jumped to 0.72, while the the 10-day moving average ticked lower to 0.68.
Driving Thursday’s most active options, Microsoft saw mixed action despite beating earnings and revenue estimates. Meanwhile, Intel Corporation (NASDAQ:INTC) posted similar results and boosted its full-year outlook, and Starbucks Corporation (NASDAQ:SBUX) nearly missed Wall Street’s expectations across the board.
Microsoft Corporation (MSFT)
MSFT stock is trading in record-high territory after posting broadly positive fiscal third-quarter earnings results yesterday.
For the quarter, Microsoft said it earned 73 cents per share on $23.56 billion in revenue, versus expectations for 69 cents per share and $23.44 billion. Cloud services continued to be a big winner for Microsoft, with CEO Satya Nadella noting that “Our results this quarter reflect the trust customers are placing in the Microsoft Cloud.”
MSFT rose 0.65% yesterday, and is up slightly in premarket trading this morning. However, options traders haven’t shown great confidence in the stock extending its recent rally higher. On Thursday, calls only made up 56% of the more than 663,000 contracts traded on MSFT stock, with much of the activity likely tied to profit taking and put protection on long stock positions. But speculative traders remain largely positive looking ahead, as MSFT’s May put/call open interest ratio currently rests at 0.61, with calls firmly in command.
Intel Corporation (INTC)
Expectations were clearly a little overcooked for Intel ahead of yesterday’s quarterly report. Intel posted a solid quarter, earning 66 cents per share on revenue of $14.8 billion, versus expectations for 65 cents per share and $14.81 billion in sales. The semiconductor giant also lifted its full-year revenue guidance and approved a $10 billion increase to its share buyback program.
And yet, INTC stock is down roughly 3% in premarket trading this morning.
There were indications of elevated bullish sentiment from INTC’s options crowd. Heading into the event, more than 472,000 contracts traded on INTC stock, with calls accounting for a near-term high 58% of the day’s take. Furthermore, the May put/call OI ratio arrives at 0.55, with calls nearly doubling puts among those options set to expire within the next month. INTC stock is set to open near $36 this morning, a strike with roughly 22,000 calls and 12,000 puts in the May series.
Starbucks Corporation (SBUX)
SBUX stock may be getting off light this morning. The shares are only down about 3.5% despite Starbucks missing on nearly every front with its second-quarter earnings report. Per-share earnings were the only highlight, arriving at 45 cents and matching expectations. Revenue, however, came in at $5.3 billion and missed Wall Street’s expectations for $5.4 billion. Furthermore, Starbucks lowered its full-year earnings target to a range of $2.06 to $2.10 per share and said that full-year revenue growth would be at the lower end of its prior forecast.
SBUX options traders were caught off guard with the weak report. Thursday’s action saw more than 301,000 contracts trade on SBUX, with calls accounting for 57% of the day’s take. Additionally, the May put/call OI ratio had dipped to 0.67 ahead of the event, evidence that calls were being added at a faster rate than puts prior to earnings.
With this morning’s premarket dip, SBUX is set to open south of more than 9,900 calls at the May $60 strike. This wealth of call OI, in combination with potential technical resistance, could make returning to the stock’s recent highs difficult for SBUX stock.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.