U.S. stock futures are mixed this morning, as the tech rebound continues while the rest of the market struggles to push into all-time high territory. Meanwhile, the Federal Reserve is out in force again today, with Boston Fed President Eric Rosengren speaking in Amsterdam and Dallas Fed President Rob Kaplan holding a moderated discussion in San Francisco. Finally, House Speaker Paul Ryan will deliver a speech on tax reform at 12:45 p.m.
Against this backdrop, futures on the Dow Jones Industrial Average are down 0.04%, S&P 500 futures have slipped 0.09% and Nasdaq-100 futures have rallied 0.03%.
On the options front, volume faltered a bit on Monday, be remained well above average for the past month. Overall, about 17.8 million calls and 13.5 million puts changed hands on the day. Over on the CBOE, the single-session equity put/call volume ratio extended its recent decline, dropping to 0.58 from Thursday’s near-term peak of 0.80. The 10-day moving average, however, hit another one-month high of 0.65.
Turning to Monday’s options activity, Apple Inc. (NASDAQ:AAPL) stock drew heavy call activity amid the tech rebound, aided by a report on the strength of the company’s global IT revenue. Meanwhile, Alibaba Group Holding Ltd (NYSE:BABA) begins a two-day conference in Detroit today for U.S. entrepreneurs looking to sell to Chinese consumers. Finally, Advanced Micro Devices, Inc. (NASDAQ:AMD) is getting a boost after Intel Corporation (NASDAQ:INTC) said its high-end i9 CPUs won’t be ready until October.
Apple Inc. (AAPL)
For the second year in a row, Apple is the king of the hill when it comes to IT vendor revenue. According to Gartner, Apple generated $218.1 billion in IT and component revenue last year, blowing past second-place Samsung (OTCMKTS:SSNLF) by $79 billion. The report provided an extra boost for AAPL stock, which is making a comeback after being hammered in last week’s tech flash-crash.
Call options traders are also making a comeback with AAPL stock. Volume topped 1.05 million contracts on Monday, with calls accounting for an above-average 64% of the day’s take. But whether this AAPL call activity is profit taking or bullish bets remains to be seen, as the July put/call open interest ratio has risen from last Wednesday’s perch at 0.64 to its current reading of 0.68. Given the current trend, profit taking appears more likely, with traders taking advantage of the current rebound to take money off the table.
Alibaba Group Holding Ltd (BABA)
China is the largest retail market in the world, and Alibaba is holding a two-day conference in Detroit this week to show some 3,000 entrepreneurs how to tap into that market — via Alibaba’s e-commerce platform, of course. The conference is part of CEO Jack Ma’s statement to President Donald Trump at the start of the year that the company could create “1 million jobs over the next five years” in the U.S. by helping America’s small businesses sell goods in China and Asia.
The conference has also helped renew a bullish interest in BABA stock, with the shares rising nearly 3.5% on Monday. BABA options traders are also back in the groove, with volume topping 451,000 contracts yesterday. Calls, meanwhile accounted for an impressive 70% of the day’s take, leaving BABA stock in a situation similar to AAPL’s. Specifically, BABA’s July put/call OI ratio has risen from a reading of 0.41 on Friday to its current perch at 0.53.
In short, puts are either being added at a faster rate than calls, or, as Monday’s volume suggests, profit taking is leading BABA options traders to close out existing call positions. Given last week’s tech troubles, the latter is likely true, though smart money might hold on as BABA attempts to once again take out the $140 region.
Advanced Micro Devices, Inc. (AMD)
As I noted back on June 6, the shine quickly wore off Intel’s newly announced i9 series of CPUs. After finally getting to take a look at the details, many tech analysts and industry specialists noted that the i9 series looked rushed — because Intel had to get something out there to compete with AMD’s Threadripper. Well, proof of the rushed announcement hit yesterday, as Intel said its top-of-the-line i9 chips wouldn’t hit the market until October, giving AMD’s Threadripper several months head start.
AMD stock jumped on the news, gaining nearly 4.3% on Monday. What’s more, options traders also took the report to heart, with calls snapping up 76% of the more than 306,000 contracts traded on AMD yesterday.
The July put/call OI ratio of 0.45 also indicates a heavy dose of optimism for AMD stock, as calls more than double puts among near-term options. With the high-end CPU race under control for the next several months, AMD should continue to tear higher.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.