Wednesday’s Vital Data: Freeport-McMoRan Inc. (FCX), Twitter Inc. (TWTR) and Caterpillar Inc (CAT)

U.S. stock futures are set to extend yesterday’s losses. Weakness in stocks was sparked yesterday after the yield on the 10-year Treasury bond blew past 3% — a major psychological level for bonds.

stock market today

Meanwhile, earnings season continues to roll on. Among those reporting today are Twitter Inc (NYSE:TWTR), Boeing Co. (NYSE:BA) and Facebook, Inc. (NASDAQ:FB).

Heading into the open, Dow Jones Industrial Average futures are down 0.15%, S&P 500 futures have fallen 0.39% and Nasdaq-100 futures are off 0.31%.

Turning to the options pits, volume remained brisk on Tuesday. About 19.8 million calls and 19.3 million puts changed hands on the session. The CBOE single-session equity put/call volume ratio jumped to 0.68. The 10-day moving average ticked higher to 0.64.

Leading Tuesday’s activity, Freeport-McMoRan Inc. (NYSE:FCX) call options were surprisingly active despite the company’s disastrous first-quarter earnings report. Meanwhile, Twitter options were also call heavy ahead of this morning’s trip to the earnings confessional. Finally, Caterpillar Inc. (NYSE:CAT) was smacked lower after warning about steel pricing headwinds.

Wednesday’s Vital Options Data: Freeport-McMoRan Inc. (FCX), Twitter Inc. (TWTR) and Caterpillar Inc (CAT)

Freeport-McMoRan Inc. (FCX)

Copper mining firm Freeport-McMoRan fell well short of the mark yesterday, and FCX stock was punished as a result. The company said it earned 46 cents per share in the first quarter, whiffing Wall Street’s target of 56 cents.

Revenue also fell short, coming in at $4.87 billion compared to the consensus for $4.93 billion. Guidance was the real killer, though. Freeport lifted its expectations for average copper prices this year while lowering its expected output. FCX stock dropped 14.5% as a result.

Surprisingly, FCX stock options traders were very call heavy following the news. Volume rose to 229,000 contracts, more than five times FCX’s daily average. Calls made up 63% of the day’s take. Looking out to May, the put/call open interest ratio rests at a rather complacent reading of 0.78.

Twitter Inc. (TWTR)

Twitter bulls were onto something yesterday when they loaded up on calls ahead of this morning’s quarterly report. The company posted its second ever GAAP profit and saw a sizeable jump in monthly active users (MAU).

Adjusted earnings came in at 16 cents per share, versus expectations for 12 cents. Revenue of $665 million blew past Wall Street’s view for $608 million. Finally, Twitter saw MAUs rise 3% year over year, adding 6 million MAUs in March. Analysts were expecting growth of just 4 million.

Ahead of the event, TWTR options traders sent more than 224,000 contracts across the tape. Calls accounted for 65% of that activity. What’s more, bulls are also abundant in the May series, where the put/call OI ratio rests at 0.52. Look for this reading to moderate a bit as traders take profits off the table following this morning’s report.

Caterpillar, Inc. (CAT)

It’s surprising that one simple sentence can completely ruin an earnings report — especially when the information in that sentence is already widely known. Caterpillar released figures for one of its best quarters ever yesterday. The company beat Wall Street’s first-quarter earnings and revenue expectations and lifted its full year guidance.

The shares were actually up sharply on the open … that is until Chief Financial Officer Bradley M. Halverson spoke during the company’s conference call. Halverson warned that rising material costs (steel and aluminum, specifically) would create headwinds.

Despite the market already knowing about President Donald Trump’s tariffs on both steel and aluminum, investors were shocked at Caterpillar’s revelation. CAT stock reversed course on the day and ended more than 6% lower.

Options activity also reversed course. Calls dominated the early going for CAT, but puts took command late in the session. Overall, 191,000 contracts traded on CAT, roughly five times the stock’s daily average. Calls still held their ground, claiming 59% of the day’s take.

As of this writing, Joseph Hargett held no positions on any of the aforementioned securities.

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