Thursday’s Vital Data: General Electric Company (GE), Netflix, Inc. (NFLX) and JD.com Inc(ADR) (JD)

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U.S. stock futures are headed lower this morning, as North Korea once again threatened to back out of next month’s summit with the U.S. The nation’s vice minister of foreign affairs said that if talks didn’t proceed, the U.S. could face off with North Korea in a “nuclear-to-nuclear showdown.”

Thursday’s Vital Data: General Electric Company (GE), Netflix, Inc. (NFLX) and JD.com Inc(ADR) (JD)The ratcheted-up rhetoric overshadowed dovish comments from the Federal Reserve yesterday. In minutes from the latest Federal Open Market Committee meeting, the central bank noted that it wouldn’t be too aggressive in raising interest rates.

Against this backdrop, futures on the Dow Jones Industrial Average have dipped 0.19%. S&P 500 futures have shed 0.16% and Nasdaq-100 futures have slipped 0.14%.

In options activity, volume fell off a cliff yesterday. Only about 15.7 million calls and 14.2 million puts changed hands on the session — well below average. On the CBOE, the single-session equity put/call volume ratio rallied to 0.65 — a four-week high.  The 10-day moving average ticked higher to 0.59.

Options traders reacted harshly to fresh news out of General Electric Company (NYSE:GE), whose CEO issued a profit warning. Elsewhere, call options were popular on Netflix, Inc. (NASDAQ:NFLX) as the stock broke out on a flurry of content news. Finally, JD.com Inc(ADR) (NASDAQ:JD) options traders appear to be betting on a double-bottom rally for the stock.

Let’s take a closer look:

Thursday’s Vital Options Data: General Electric Company (GE), Netflix, Inc. (NFLX) and JD.com, Inc. (JD)

General Electric Company (GE)

Things had just started going in the right direction for GE stock bulls. The shares were up 20% off their March bottom … and then the profit warning came. Yesterday, CEO  John Flannery said that GE Energy would not see any profit growth this year.

Flannery placed the blame on GE’s heavy-duty gas-powered turbines sales, which are expected to remain weak through 2020. The statement also raised analyst concerns that GE may have to trim its dividend if things didn’t improve soon.

GE options traders responded by piling into puts. Volume yesterday came in at over 555,000 contracts, or more than three times GE’s daily average. Puts claimed 54% of the day’s take.

Looking at data from Trade-Alert.com, it appears that several traders took aim at a June/July $14 strike put calendar spread in response to the news. Calendar spreads are designed to take advantage of changes in implied volatility, instead of betting directly against or for the underlying stock.

GE finished yesterday just above $14 per share, and the stock is sinking in pre-market activity this morning.

Netflix, Inc. (NFLX)

Netflix is once again dominating the financial media headlines this week. The company announced a $150 million action-movie project with Deadpool actor Ryan Reynolds and director Michael Bay. Netflix also signed President Barack Obama and his wife, Michelle, to a multiyear agreement to produce original content.

The news was enough to push NFLX stock past short-term resistance and help the shares breakout of an ascending triangle formation — a technical pattern that can signal additional buying strength.

NFLX options traders were unusually call heavy following the breakout. Volume topped 252,000 contracts, nearly doubling NFLX’s daily average. Furthermore, calls snapped up 60% of the day’s take.

That said, there is still plenty of room for improvement in options sentiment. The June put/call open interest ratio currently rests at 0.98, as puts nearly match calls for the series. The next potential hurdle for NFLX is $350, and a move above this area could bring more call OI to the table.

JD.com, Inc. (JD)

Third-place Chinese ecommerce company JD.com may be on the verge of a comeback rally. The stock has been beaten down so far this year, but JD appears to have put in a double-bottom at $35.50. In fact, at least on options trader is betting big on just such a rebound.

Nestled among the more than 155,000 contracts traded on JD yesterday was a block of 8,000 July $40 calls. According to Trade-Alert.com, this block was bought to open at a price of 65 cents, or $65 per contract. The total outlay on this bullish position was a cool $520 thousand.

For the trade to break even, JD would need to rally to $40.65 by the time the options expire on July 20. A double on the position lies at $41.30. Such a rally would put JD stock above its 50-day moving average, but leave it just shy of its 200-day trendline.

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/thursdays-vital-data-general-electric-company-ge-netflix-inc-nflx-and-jd-com-incadr-jd/.

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