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Thursday’s Vital Data: Snap Inc (SNAP), Twitter Inc (TWTR) and Facebook Inc (FB)

Options activity provides a look at expectations on SNAP, TWTR and FB

By Joseph Hargett, InvestorPlace Contributor


U.S. stock futures are trading tentatively higher this morning. Wall Street continues to lick its wounds following a considerable correction from all-time highs. Political instability in Washington isn’t helping matters, either.

stock market todayThe U.S. government is up against another shutdown deadline, as lawmakers push to pass a spending bill for the fiscal year. The emergency measure passed last month expires at midnight.

Senate Majority Leader Mitch McConnell and Senate Minority Leader Chuck Schumer announced a plan yesterday, but it faces a hard road in the House where Republicans will need Democrats’ help to pass it.

Despite another potential shutdown, Dow Jones Industrial Average futures are up 0.52%, S&P 500 futures have gained 0.53% and Nasdaq-100 futures are higher by 0.66%.

Turning to the options pits, volume remained heavy on Wednesday. Put traders have started to back down. Overall, about 21.1 million calls and 21.7 million puts changed hands on the session. The CBOE single-session equity put/call volume ratio moderated to 0.68. The 10-day moving average continued its run to hi 0.63, yet another two-month high.

Taking a closer look at yesterday’s options activity, Snap Inc. (NYSE:SNAP) calls volume surged following an impressive fourth-quarter earnings report. Twitter Inc (NYSE:TWTR) also saw heavy call options volume ahead of its trip to the earnings confessional this morning. Finally, Facebook Inc (NASDAQ:FB) investors are largely ignoring calls by comedian Jim Carrey to dump the shares due to its role in Russian interference in the 2016 election.

Thursday’s Vital Options Data: Snap Inc (SNAP), Twitter Inc. (TWTR) and Facebook Inc. (FB)

Snap Inc. (SNAP)

The company posted blowout fourth-quarter earnings, prompting Snap stock to surge nearly 50% yesterday. For the quarter, Snap reported a loss of just 13 cents per share, versus expectations for a 16-cent loss. Revenue surged 72% to $285.7 million, also blowing past estimates for $256 million.

Daily users rose 18% from a year ago to 178 million — nearly double the consensus and ending Snaps slowing growth trend.

Snap stock options traders relished in the rally. Volume surged to over 669,000 contracts, hitting an multi-month high. Calls consumed 68% of the day’s take. Negativity is still dominant on SNAP, however, despite yesterday’s wellspring of optimism.

For instance, the February put/call open interest ratio currently rests at 0.93 with puts and calls nearly even. That said, an unwinding of this negativity could provide additional buying strength as former bears become bulls in the wake of earnings.

Twitter Inc (TWTR)

Twitter is having its own “Oh, Snap!” moment this morning. TWTR stock jumped more than 20% in premarket trading after reporting stronger-than-expected quarterly results. Earnings rose to 19 cents per share from 11 cents per share last year, and topped expectations for 14 cents. Revenue rose to $732 million, also besting the Street’s target for $686.5 million. Monthly active users totaled also rose, gaining 4% to 330 million.

“Q4 revenue growth was driven by continued strong engagement growth, improved revenue features, improved ROI, and better sales execution,” Twitter said in a release.

Twitter stock options traders were hopeful ahead of the report. Volume rose to 362,000 contracts, with calls making up 64% of the day’s take. Call traders are going to be happy if TWTR stock maintains its gains through the open.

Speaking of call traders, if you took my main recommendation for a Twitter Feb $25/$26 bull call spread on Tuesday, you are potentially sitting on a 200%-plus gain right now. Congratulations! Bank your profits and look for the next opportunity.

Facebook Inc (FB)

Comedian/actor Jim Carrey took to Twitter, of all places, yesterday to urge followers to drop Facebook stock and delete their FB pages. Carrey says that Facebook profited from the Russian interference in the 2016 U.S. presidential election, and that it hasn’t done enough to fix the problem.

The irony of using Twitter for this particular lash-out at Facebook shouldn’t be lost on too many investors. Twitter has admitted that more than 50,000 Russian bots were also active during the 2016 elections.

In fact, yesterday’s roughly 2% dip in FB stock was tied more to broadmarket weakness than Mr. Carrey’s tweet.

Facebook stock options traders certainly paid him no heed. Volume on FB stock jumped to over 298,000 contracts, with calls gobbling up 71% of the day’s take. FB broke below its 50-day moving average yesterday, and we could see technical buyers move in to push the shares higher once again. FB options traders were likely focused on this technical outcome.

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/2018/02/thursdays-vital-data-snap-inc-snap-twitter-inc-twtr-and-facebook-inc-fb/.

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