Monday’s Vital Data: Tesla, Nike and Citigroup

U.S. stock futures are trading broadly lower this morning. Heated trade-war rhetoric continued over the weekend, this time between the U.S. and the European Union.

stock market todayOn Sunday, President Donald Trump said that threatening to impose global auto tariffs of 20% was his biggest weapon to get trade concessions from the EU. He the said that the EU was “as bad as China” in hindering U.S. trade. The EU has threatened to respond with $300 billion in fresh tariffs against U.S. products.

Heading into the open, futures on the Dow Jones Industrial Average have fallen 0.60%. Meanwhile, S&P 500 futures have shed 0.51% and Nasdaq-100 futures have sold off 0.74%.

In options activity, volume was anemic on Friday. Only about 17.3 million calls and 15.5 million puts changed hands on the session. On the CBOE, the single-session equity put/call volume rose to 0.69. The 10-day moving average hit a one-month high of 0.60.

Options traders we’re eyeing Tesla’s (NASDAQ:TSLA) Model 3 production update heading into the weekend … and were not disappointed.  Meanwhile, Nike (NYSE:NKE) attracted a flood of call options activity after posting blowout fourth-quarter earnings. Finally, Citigroup (NYSE:C) said it was lifting both its quarterly dividend and it’s stock buyback program.

Let’s take a closer look:

Monday’s Vital Options Data: Tesla, Nike, Citigroup

Tesla (TSLA)

Tesla reportedly hit its self-imposed goal of producing 5,000 Model 3s in one week this Sunday. The company will officially release second-quarter production numbers this week, but announced the milestone internally via an email from CEO Elon Musk.  “I think we just became a real car company,” Musk wrote, according to Reuters.

TSLA stock options traders were looking for a pop following this weekend’s expected announcement. Volume rose to more than 217,000 contracts, with calls making up 62% of the day’s take. Short-term traders are quite bullish, as indicated by the weekly July 6 series put/call open interest ratio of 0.62. This reading indicates that calls are on the verge of doubling puts among options that expire this week.

With Tesla hitting is goal, and additional quarterly production figures due out later this week, I would expect to see more call options directed at TSLA stock. The shares are up more than 5% in premarket activity this morning.

Nike (NKE)

Nike stock rocketed more than 11% higher on Friday, and was pretty much the only reason the Dow finished in positive territory. The athletic clothier reported that fourth-quarter earnings rose 15% to 69 cents per share, with revenue rising 13% to $9.79 billion. Analysts were expecting earnings of 64 cents and sales of $9.39 billion.

Nike also announced it would be buying back $15 billion worth of shares.

NKE stock options traders chased Friday’s rally. Volume swelled to more than 164,000 contracts, or about 7.5 times NKE’s daily average volume. Calls made up 60% of the day’s take. The activity pulled Nike’s July put/call OI lower , but this ratio still rests at an elevated reading of 0.82.

With NKE failing to over take $80 on it’s initial rally, and the shares fading in premarket trading this morning, I would expect more puts to pile on as traders fade the shares.

Citigroup (C)

Citigroup got some rare options attention on Friday. The banking giant announced it was lifting its quarterly dividend from 32 cents to 45 cents per share and boosting its buyback program to $17.6 billion. C stock attempted to rally on the news late on Friday, but was pulled back from session highs by broad market selling pressure.

Options traders were not deterred, however. Volume on Friday came in at 179,000 contracts, or just shy of doubling C’s daily average. Calls gobbled up 75% of the day’s take.

That said, C’s sentiment backdrop remains near bearish extremes. Currently, the July put/call OI ratio comes in at 0.83, which rests in the upper 75% of all readings taken in the past year for C. In short, options traders have rarely been more bearish on C stock.

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

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