Thursday’s Vital Data: Snap Inc (SNAP), Gilead Sciences, Inc. (GILD) and Weatherford International plc (WFT)

Options activity provides a look at expectations on SNAP, GILD and WFT

U.S. stock futures are struggling for gains this morning. Mixed corporate earnings, including misses from Tesla Inc (NASDAQ:TSLA) and Snap Inc (NYSE:SNAP), are weighing on market sentiment.

stock market today

Meanwhile, Wall Street is looking ahead to key economic data today. Updates on weekly jobless claims and non-manufacturing activity are on tap this morning, with investors looking ahead to tomorrow’s monthly jobs report.

Heading into the open, futures on the Dow Jones Industrial Average are up 0.03%, S&P 500 futures have gained 0.07% and Nasdaq-100 futures have added 0.06%.

Turning to the options pits, volume was anemic on Wednesday. Overall,  about 17.1 million calls 14.9 million puts crossed the tape. On the CBOE, the single-session equity put/call volume ratio rose to 0.65. The 10-day moving average ticked higher to 0.65.

Options traders remained focused on corporate earnings yesterday, with both Snap Inc. and Gilead Sciences, Inc. (NASDAQ:GILD) attracting heavy volume in the wake of yesterday’s reports. Meanwhile, Weatherford International, Inc. (NYSE:WFT) was targeted by a rather large influx of put volume despite a lack of headline news.

Let’s take a closer look:

Tuesday’s Vital Options Data: Snap Inc. (SNAP), Gilead Sciences, Inc. (GILD) and Weatherford International plc (WFT)

Snap Inc. (SNAP)

After the close on Tuesday, Snap reported a first-quarter loss of 17 cents per share on revenue of $230.7 million. Earnings arrived in line with expectations, but revenue missed the Street’s target for $244.3 million. What’s more, Snap reported daily active users of 191 million, well shy of the consensus forecast for 194.2 million.

Analysts panned the report in droves, blaming Snap’s redesigned app. No less than seven ratings firms either cut their price target or cut their rating on SNAP stock due to the lower user count. “Snap is a poorly structured company that is demonstrating a clear pattern of mismanagement. We think the negative news cycle around Snap will continue and advertisers will likely continue to approach Snap skeptically,” said Piper Jaffray.

SNAP options traders were mixed following the report, however. Volume topped 361,000 contracts, more than quadrupling Snap’s daily average. Puts and calls were nearly divided on the day, with puts claiming 51% of the day’s take.

What’s more, SNAP options traders are apparently looking for a rebound. Currently, the May put/call open interest ratio comes in at 0.53, with calls nearly doubling puts for the series. These short-term traders may be on to something. After falling more than 21% yesterday, SNAP stock is up nearly 1% premarket.

Gilead Sciences, Inc. (GILD)

HIV drug sales are falling at Gilead Sciences, and its hurting the company’s bottom line. Gilead reported first-quarter earnings of $1.48 per share, missing Wall Street’s target for $1.67 per share. Revenue also came up short, arriving at $5.09 billion versus expectations for $5.4 billion.

Gilead said that sales of antiviral products fell sharply year over year. Those sales, which include chronic hepatitis B (HBV), chronic hepatitis C (HCV) and HIV products, plunged 31% year-over-year to $4.4 billion.

GILD options traders did not load up on puts following the report, however. Volume rose to 130,000 contracts, or more than five times Gilead’s daily average. Calls claimed 63% of that higher than average volume.

Furthermore, short-term GILD options traders remain hopeful of a rebound. Currently, the May put/call OI raito rests at 0.53. Peak call OI for the series totals some 24,000 contracts at the deep out-of-the-money $75 strike. While $75 seems a stretch for GILD after yesterday’s decline, the shares are trading half-a-percent higher premarket this morning.

Weatherford International, Inc. (WFT)

Oilfield services company Weatherford was smacked with a ridiculous amount of put option volume yesterday. Despite a lack of headline news, WFT volume surged to 232,000 contracts — more than 26 times the stock’s daily average. Puts made up 98% of that activity, and one particularly large block trade was responsible for it all.

According to data from Trade-Alert.com, a block of 200,000 June $3 puts traded on WFT yesterday at about 10:45 a.m. This block traded for 20 cents, or $20 per contract, which was between the bid and ask prices at the time. The total outlay for this position was a whopping $4 million and represents 20 million shares, or 2% of WFT’s total float.

With the contracts trading between the bid and ask, it’s impossible to tell if they were bought or sold — i.e. a bet that WFT would fall or a put sell position to collect premium and/or buy WFT stock at $3 per share.

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/tuesdays-vital-data-snap-inc-snap-gilead-sciences-inc-gild-weatherford-international-plc-wft/.

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