Friday’s Vital Data: Wal-Mart Stores Inc (WMT), AT&T Inc. (T) and Micron Technology, Inc. (MU)

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U.S. stock futures are trending lower heading into the open, putting weekly gains in jeopardy for the major market indices. Yesterday’s elation that the Republican tax plan passed the House quickly faded after news broke in the Trump-Russia collusion investigation.

stock market todaySpecifically, Special Counsel Robert Mueller subpoenaed Russia-related documents from more than a dozen officials from Donald Trump’s campaign last month.

As a result, Dow Jones Industrial Average futures are down 0.07% heading into the open, followed by S&P 500 futures with a loss of 0.02%. Nasdaq-100 futures, meanwhile, are up 0.09%.

On the options front, volume was brisk and bullish on Thursday, as about 17.7 million calls and 14.7 million puts changed hands. On the CBOE, the single-session equity put/call volume ratio retreated to 0.64, while the 10-day moving average held at 0.65.

Turning to Thursday’s options activity, Wal-Mart Stores Inc (NYSE:WMT) was a hotbed of speculation after the company beat third-quarter forecasts and issued upbeat holiday guidance. Meanwhile, AT&T Inc. (NYSE:T) drew bullish speculation in its continued quest to acquire Time Warner Inc (NYSE:TWX), and Micron Technology, Inc. (NASDAQ:MU) drew buyers amid a technical breakout.

Friday’s Vital Options Data: Wal-Mart Stores Inc (WMT), AT&T Inc (T) and Micron Technology, Inc. (MU)

Wal-Mart Stores Inc. (WMT)

WMT stock surged more than 10% on Thursday, as traders responded to better-than-expected quarterly earnings and a strong holiday-quarter outlook. Walmart said it earned $1 per share in the quarter, as revenue rose to $123.18 billion. Analysts were expecting earnings of just 97 cents per share on revenue of $121.05 billion.

E-commerce was the main highlight, however, gaining 50% year-over-year. Looking ahead, Walmart said it expects full-year earnings of $4.38 to $4.46 per share, up from a prior view of $4.30 to $4.40 per share.

Options volume spiked on WMT stock following the report, with the more than 320,000 contracts traded amounting to more than seven times WMT’s daily average. Calls were the option of choice, making up 66% of the day’s take.

December options reveal a lingering pessimism for WMT, however. The December put/call open interest ratio currently rests at 0.82. This reading has trended lower in the past week, though, hinting that sentiment is shifting bullish on WMT.

AT&T Inc. (T)

AT&T hasn’t given up on buying Time Warner just yet. The company has hired former Trump lawyer Daniel Petrocelli to serve as lead trial counsel if the U.S. Justice Department decided to sue to block the buyout. Furthermore, CFO John Stephens told an investor conference in Barcelona that AT&T still thinks the deal will go through.

“The timing of the close is uncertain … We continue to believe the transaction will close,” Stephens said at the conference.

Despite T stock’s poor price action, options traders remain bullish. Yesterday, nearly 253,000 contracts traded on T, with calls snapping up 61% of the day’s take. Furthermore, the December put/call OI ratio rests at 0.56, as calls nearly double puts among soon-to-be front-month options. The most popular December strike is the $37 call, where more than 55,000 contracts currently reside.

Micron Technology, Inc. (MU)

Luke Lango recently said he believes that MU stock could go to $50. After watching MU break out above formerly staunch resistance at $45, this may very well be the case. The $45 region rejected MU earlier in the month, sending the shares down for a test of trendline support at their 20-day moving average and the $40 region. This support not only held, but provided a springboard effect for MU stock, as technical buyers moved in.

MU options traders have been picking up on the cues, and are loading up on call options. Volume yesterday topped 215,000 contracts, with calls gobbling up 77% of the day’s take.

More impressive, however, is that the December put/call OI ratio has plummeted to an annual low of 0.24. In other words, calls more than quintuple puts among December options, indicating an extremely bullish bias among speculative investors.

Surprisingly, the most popular December call contract is not the $50 strike … it’s the now-in-the-money $45 strike, with more than 82,000 contracts. I would expect to see some profit taking from these in-the-money strikes over the next week or so, with more calls being added closer to $50 as MU extends its breakout.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2017/11/friday-vital-data-wal-mart-stores-inc-wmt-att-inc-t-and-micron-technology-inc-mu/.

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