Wednesday’s Vital Data: Netflix, General Electric and Snap Inc.

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U.S. stock futures are headed higher this morning. Wall Street is digesting yesterday’s trade-war induced plunge, with bargain hunters picking through the fallout. The situation remains precarious, however, with President Donald Trump calling for $200 billion in new tariffs on Chinese imports, and China promising to retaliate in kind.

Heading into the open, futures on the Dow Jones are up 0.39%. Meanwhile, S&P 500 futures have risen 0.21% and Nasdaq-100 futures have added 0.26%.

In options activity, volume remained well below average despite the market’s plunge. Overall, about 17.1 million calls and 15.8 million puts changed hands on the session. On the CBOE, the single-session equity put/call volume rose to 0.59. The 10-day moving average ticked higher to 0.55.

Options traders gave new tech a go and old tech the boot on Tuesday. Netflix (NASDAQ:NFLX) call options volume spiked after the stock saw a pair of price target increases.

Meanwhile, General Electric (NYSE:GE) was flooded with puts after news broke it was being kicked out of the Dow. Finally, Snap (NYSE:SNAP) was popular among call traders despite a bearish note from Cowen on user data.

Let’s take a closer look:

Wednesday’s Vital Options Data: Netflix, Inc. (NFLX), General Electric Company (GE) and Snap Inc. (SNAP)

Netflix (NFLX)

Both GBH Insights and Piper Jaffray lifted their price targets on NFLX stock yesterday. Piper bumped Netflix to $460 from $375 due to a solid second-quarter outlook. GBH was a super bull, however. The rating firm lifted NFLX stock to $500 from $400 and said that there was an “an eye-popping disparity” between Netflix’s user engagement and its closest rivals.

NFLX stock hit an all-time high following the pair of bullish notes, despite a steep market selloff. Options traders chased the rally. Volume on NFLX rose to 328,000 contracts, or nearly double the stock’s daily average. Calls made up 63% of the day’s take.

Despite the bump in bullish sentiment, there is plenty of room on the Netflix bandwagon. For instance, the July put/call open interest ratio rests at a lofty reading of 0.99. This ratio is falling quickly, though, after hitting a high near 1.21 less than two weeks ago.

General Electric (GE)

It’s the end of the old guard for the Dow. General Electric Company, the last of the original Dow 30, is being shown the door. GE will be replaced by Walgreens (NYSE:WBA).

GE stock fell 1.8% on the news and was down another 1.3% in premarket trading this morning. Options traders, used to chasing GE stock lower, loaded up on put options yesterday. Volume topped 308,000 contracts, with puts claiming 67% of the day’s total activity.

A closer look reveals that the July $12.50 put was the most popular. According to Trade-Alert.com, more than a third of yesterday’s total volume traded at the July $12.50 put on GE. What’s more, most of those (including a block of 85,000 contracts) traded at the ask price.

Snap Inc. (SNAP)

Snap stock plunged more than 5% yesterday after analysts at Cowen took aim at the shares. The rating firm cut its price target to $9 from $10, and lowered its daily active user outlook as well as its earnings and revenue estimates for fiscal 2018.

“Per our recent ad buyer survey, SNAP was lowest [sic] Social platform in key attributes like ROI, data and user targeting,” Cowen told clients in a research note.

But SNAP options traders appeared more interested in a rebound. Volume rose to 203,000 contracts, with call making up 62% of the day’s take. The July put/call OI ratio also edged lower, slipping from 0.95 to 0.93 overnight.

Traders that got into Monday’s bear put spread recommendation on SNAP could have hit their maximum return yesterday … if they were nimble. SNAP hit an intraday low below $13. The stock is headed back to $13 in premarket trading this morning, so keep your eyes on your positions.

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


Article printed from InvestorPlace Media, https://investorplace.com/2018/06/wednesdays-vital-data-netflix-general-electric-and-snap-inc/.

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