U.S. stock futures are mixed heading into the open, indicating a continuation of yesterday’s decline. Wall Street is on pins and needles ahead of today’s Fed minutes release. Investors will be looking for hawkish interest rate and inflation commentary from the Fed.
At last check, Dow Jones Industrial Average futures were down 0.14% and S&P 500 futures were off 0.03%. Nasdaq-100 futures, however, had gained 0.13%.
Turning to the options pits, volume was well below the past month’s average yesterday. Overall, about 17.6 million calls and 14.6 million puts changed hands on the session. The CBOE single-session equity put/call volume ratio rebounded to 0.66. The 10-day moving average hit another one-week low of 0.68.
Taking a closer look at yesterday’s options activity, Walmart Inc (NYSE:WMT) saw volume spike to nearly six times its daily average after reporting an earnings miss. The miss was seen an an opportunity for Amazon.com, Inc. (NASDAQ:AMZN) options traders. Finally, Nvidia Corporation (NASDAQ:NVDA) drew increased speculation as cryptocurrency prices rebounded from recent lows.
Walmart Inc. (WMT)
Shares of the world’s largest brick-and-mortar retailer plunged yesterday. Walmart stock fell more than 10% after the company missed Wall Street’s earnings estimates by 4 cents per share. The biggest disappointment was a significant slowdown in online sales, which rose just 23%, less than half the pace of the prior four quarters.
Options traders appeared optimistic, however. Volume spiked to 339,000 contracts, with calls making up 62% of the day’s take. Still, the March put/call open interest ratio rests at a middling reading of 0.78. While many investors may see yesterday’s plunge as a buying opportunity, there is still enough concern in the options market to indicate a rough ride to a rebound.
Amazon.com, Inc. (AMZN)
Walmart’s slowdown in online sales was seen as a boon for Amazon. Investors had been worried that Walmart could pose a more serious challenge to the online retailing behemoth. Yesterday’s earnings allayed some of those concerns, at least for now. In fact, AMZN stock rose 1.4% on the news, despite broad market selling pressure.
Options traders remained on the conservative side, though. Volume rose to 153,000 contracts, just shy of Amazon’s daily average. Calls only made up about 56% of the day’s take. And there are signs of profit taking. Amazon’s March put/call OI ratio has risen over the past week from 0.97 on Feb 12 to today’s reading of 1.08.
Traders appear to be nervous as AMZN stock once again approaches the $1,500 region.
Nvidia Corporation (NVDA)
After tagging a low near $6,160 in the first week of February, bitcoin prices have staged an impressive recovery. The news is good for companies like Nvidia, which makes the graphics cards that are popular for mining cryptocurrency. Furthermore, there are rumors that Nvidia will soon release a chipset specifically for mining cryptocurrency, speculatively named “Turing.” Such a move could bolster regular GPU sales, which have struggled with supply issues due to crypto-mining demands.
Nvidia stock options traders have grown more bullish recently as a result. Volume yesterday came in at 162,000 contracts, a touch below average. Calls accounted for 63% of the day’s take.
Like most chip stocks, there is still a healthy degree of skepticism for NVDA. The March put/call OI ratio rests at 1.04, with puts narrowing maintaining favor. Look for this skepticism to grow as the shares trek a bit further into all-time high territory.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.