Friday’s Vital Data: Apple Inc. (AAPL), Nvidia Corporation (NVDA) and Helios and Matheson Analytics Inc. (HMNY)

Options activity provides a look at expectations on AAPL, NVDA and HMNY

By Joseph Hargett, InvestorPlace Contributor

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U.S. stock futures are trading higher this morning. In fact, the Dow Jones Industrial Average is poised to log its seventh win in a row as inflationary concerns ease.

stock market today

Wall Street could get another sentiment shot in the arm today. April import prices and the May University of Michigan consumer-sentiment index are both due out later this morning.

However, tech is under pressure. Nvidia Corporation (NASDAQ:NVDA) stock is down more than 2.5% premarket following last night’s quarterly earnings report.

Heading into the open, futures on the Dow Jones Industrial Average are up 0.24%, S&P 500 futures have added 0.23% and Nasdaq-100 futures have gained 0.15%.

Turning to the options pits, volume remained above average yesterday with a skew toward bullish calls. About 23.5 million calls and 16.5 million puts crossed the tape on Thursday. On the CBOE, the single-session equity put/call volume ratio dropped again to 0.51 — it’s lowest level since mid-January. The 10-day moving average, meanwhile, fell to 0.61 — it’s lowest reading since March 15.

Options traders were distracted from the usual earnings fair on Thursday. Apple Inc. (NASDAQ:AAPL) options traders jumped on calls following reports of a Goldman Sachs Group, Inc. (NYSE:GS) co-branded credit card. Meanwhile, Helios and Matheson Analytics Inc. (NASDAQ:HMNY) said it was out of cash once again, which oddly prompted call trading.

On the earnings front, Nvidia was call heavy ahead of last night’s quarterly report. But things aren’t playing out too well for the bulls this morning.

Let’s take a closer look:

Friday’s Vital Options Data: Apple Inc. (AAPL), Nvidia Corporation (NVDA) and Helios and Matheson Analytics Inc. (HMNY)

Apple Inc. (AAPL)

In a move that could help boost the usage and popularity of Apple Pay, Goldman Sachs and Apple are reportedly working on a co-branded consumer credit card. The card will sport the Apple Pay logo and is expected to launch early next year. The Wall Street Journal broke the story, but noted that both Apple and Goldman declined to comment on the report.

Apple options traders ate the news up. Volume surged to 1.56 million contracts, with calls gobbling up an impressive 82% of the day’s take. AAPL stock also closed north of $190 on the session, prompting additional technical-related call buying.

That said, there is a lot of room for improvement in Apple’s option sentiment backdrop. Currently, the June put/call open interest ratio comes in at 0.97 — with calls and puts just shy of parity. If AAPL can gain a solid foothold north of $190, it could go a long way toward boosting call OI in the June series.

Nvidia Corporation (NVDA)

Nvidia posted impressive quarterly earnings after the close last night, but with a key caveat. For the quarter, earnings soared to $2.05 per share on revenue of $3.21 billion. Analysts were blown away, expecting just $1.46 per share and $2.89 billion in revenue.

However, Nvidia said that about $289 million in sales were to cryptocurrency miners — a much larger portion of revenue that competitor Advanced Micro Devices, Inc. (NASDAQ:AMD) reported. CEO Jensen Huang predicted a sharp decline in this revenue, however.

“We did almost $300 million in crypto, and next quarter we expect it to be down by two-thirds of that,” Huang said. That predicted decline has NVDA stock down sharply this morning.

Options traders were not as prepared as they should have been judging by yesterday’s activity. More than 344,000 contracts traded on NVDA, pushing daily option volume to more than 2.5 times the average. Calls accounted for 60% of the traffic.

There is already a high contingent of put OI in the June series, which could grow following today’s decline. Specifically, the June put/call OI ratio rests at 1.17, with puts clearly more popular in the back-month series. In fact, there are about 6,600 June $250 puts that could come close to trading in-the-money by today’s close.

Helios and Matheson Analytics Inc. (HMNY)

Back in February, I went on a rant regarding Helios and Matheson Analytics. The company was fresh off a stock offering to raise cash and was considering a cryptocurrency offering for basically the same purpose.

“Unless Helios finds some way to turn a profit, and I doubt very much that even doubling subscriber numbers would accomplish this, the company is in serious trouble,” I noted.

Three months later, the MoviePass owner is (not surprisingly) looking for cash once again. In a filing on Tuesday, Helios said it had just $15.5 million in cash at the end of April and that it was burning through $21.7 million a month. It seems that profits are hard to come buy when you offer 30 movies a month at less than the cost of a ticket for one showing.

Since the news, HMNY stock has plummeted 245%. And yet, call option volume has soared. More than 131,000 contracts traded on HMNY yesterday, with calls making up 72% of the day’s take. According to Trade-Alert.com, most of these contracts were bought to open.

Why buy calls on HMNY? To cover your short positions. Shorting HMNY stock has become so popular that doing so has become considerably expensive. While a bankruptcy may be inevitable at this point, it still pays to cover those shorts to protect against a surprise resurgence in the shares.

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


Article printed from InvestorPlace Media, https://investorplace.com/2018/05/fridays-vital-data-apple-inc-aapl-nvidia-corporation-nvda-and-helios-and-matheson-analytics-inc-hmny/.

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