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Tuesday’s Vital Data: Tesla Inc (TSLA), United States Steel Corp. (X) and Netflix, Inc. (NFLX)

U.S. stock futures are trading broadly lower this morning. Rising bond yields and a strengthening dollar are to blame, once again. The Treasury Department will auction $28 billion of 2-year notes, $35 billion of 5-year notes and $29 billion of 7-year notes this week. The influx of new treasurys is driving prices lower and lifting yields, sending stocks tumbling.

stock market todayHeading into the open, Dow Jones Industrial Average futures are down 0.65%, S&P 500 futures have fallen 0.59% and Nasdaq-100 futures are lower by 0.55%.

Turning to the options pits, volume was brisk on Friday. Overall, about 25.4 million calls and 21.3 million puts changed hands at the end of last week. The CBOE single-session equity put/call volume ratio fell to a one-month low of 0.52. The 10-day moving average dipped to a one-week low of 0.69.

Taking a closer look at yesterday’s options activity, Tesla Inc (NASDAQ:TSLA) saw mixed activity on Friday after reports surfaced the company had produced 300,000 vehicles. Meanwhile, United States Steel Corporation (NYSE:X) options volume surged after President Trump said he was considering steel import tariffs. Finally, Netflix, Inc. (NASDAQ:NFLX) call volume lingered a day after the company received a price-target bump and bullish research note.

Tuesday’s Vital Options Data: Tesla Inc. (TSLA), United States Steel Corp. (X) and Netflix, Inc. (NFLX)

Tesla Inc. (TSLA)

Hitting the 300,000-vehicle production mark should have been a point of celebration for Tesla stock investors. Bloomberg’s Tesla production tracker reported the milestone this weekend. However, production issues for the Model 3 have undermined the revelry.

Specifically, consumers who preordered the Model 3 may be in for a bit of a shock, as the $7,500 electric vehicle tax credit begins to phase out after Tesla sells 200,000 vehicles. Some competitors, like Chevy with it’s Bolt, are reporting defections from the waiting list to take advantage of the tax credit. However, Chevy is also nearing the EV sales cap.

Worried that more defections could be on the way, TSLA stock options traders expressed concern on Friday. Volume on TSLA rose to over 253,000 contracts, with calls only eking out 54% of the day’s take. Pessimism is growing thick on Tesla heading into March, with the front-month put/call open interest ratio rising to 1.20. Look for this ratio to trend higher as this story develops.

United States Steel Corporation (X)

Last week, the U.S. Commerce Department recommended tariffs on steel and aluminum imports, sending steel stocks like U.S. Steel soaring. President Donald Trump has said he is considering the tariffs, after signing similar tariffs in the solar industry last month.

While X stock rallied nearly 15% on the news, options traders weren’t nearly as enthusiastic. Volume rocketed to 245,000 contracts on X stock, nearly six times U.S. Steel’s daily average. Calls, however, only made up 64% of the day’s take — a figure that should have been higher given X stock’s rally.

Furthermore, much of this call activity may have been profit taking. X’s March put/call OI ratio rose to 0.90 after Friday’s activity. In other words, despite added call volume, puts were added at a faster pace, suggesting many of those call trades were closeouts.

Netflix, Inc. (NFLX)

On Thursday, GBH Insights reiterated it’s “highly attractive” rating on Netflix stock and lifted its price target to $310 from $255. According to GBH, the new target reflects stronger-than-expected subscriber additions for the rest of the year. NFLX stock rose more than 5% on Thursday, but lost about half that gain on Friday.

Still, NFLX options traders have remained bullish. Volume on Friday came in at 203,000 contracts, with calls making up 64% of the day’s take — a relatively high percentage historically for NFLX.

Looking out to March, we find that the put/call OI ratio is in flux. The reading has fallen in recent weeks to 0.70, down from near-term highs north of 0.90. However, this ratio is still in the middle of NFLX’s annual range, indicating complacency toward the shares.

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

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