Thursday’s Vital Data: Advanced Micro Devices, NXP Semiconductors and General Motors

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Facebook (NASDAQ:FB) was killing U.S. stock futures this morning. Only Dow Jones Industrial Average futures, which do not list FB stock, were trading in the green in premarket activity.

Thursday’s Vital Data: Advanced Micro Devices, NXP Semiconductors and General MotorsFacebook reported lower-than-expected quarterly revenue, slowing user growth and weak guidance. FB stock opened nearly 20% lower on the open, it’s single biggest one-day loss ever.

Outside of Facebook, weekly jobless claims, June durable goods orders and the advance trade in goods report for June all hit before the open.

In options activity, call volume surged ahead of Facebook earnings and overall activity yesterday was brisk. About 20.3 million calls and 14.6 million puts changed hands on the session. Over on the CBOE, the single-session equity put/call volume ratio slipped again to 0.61. The 10-day moving average, however, ticked higher to 0.62.

Options traders flooded Advanced Micro Devices (NASDAQ:AMD) with calls ahead of last night’s quarterly report. Meanwhile, NXP Semiconductors (NASDAQ:NXPI) was also heavy with call options despite Qualcomm (NASDAQ:QCOM) dropping it’s takeover bid. Finally, General Motors (NYSE:GM) options were mixed after the automotive giant’s earnings gave investors a reality check.

Let’s take a closer look:

Thursday’s Vital Options Data: Advanced Micro Devices, NXP Semiconductors and General Motors

Advanced Micro Devices (AMD)

AMD stock is up more than 7% in premarket action this morning after the company posted its best earnings in seven years. Advanced Micro reported earnings of 14 cents per share on revenue of $1.76 billion. Analysts were expecting earnings of 12 cents on revenue of $1.72 billion.

Options traders appeared ready. Volume yesterday rose to 447,000 contracts, with calls gobbling up 59% of the day’s take. Looking out to August, AMD options traders are expecting this rally to continue.

Currently, the August put/call open interest ratio arrives at 0.49, with calls more than doubling puts for the series. Additionally, heavy call OI has accumulated at both the Aug $18 and $20 strikes, hinting at high expectations from options traders.

NXP Semiconductors (NXPI)

NXPI stock dropped more than 2% yesterday and is down another 5% this morning. The selloff comes as Qualcomm officially ended its $44 billion acquisition bid for NXPI amid a growing trade war between the U.S. and China. Chinese regulators were the only officials left to sign off on the deal, and they have been silent for months.

NXPI is entitled to a $2 billion breakup fee from the deal, however. The company has said it would use that money to help fund a $5 billion stock buyback.

Despite the fallout, NXPI options traders still loaded up on calls. Volume yesterday jumped to over 239,000 contracts, with calls claiming 72% of the day’s take. That said, August options may explain some of the recent influx of call activity. Specifically, several deep out-of-the-money August call strikes are flush with high levels of open interest.

These accumulations are likely related to arbitrage plays surrounding the now broken Qualcomm deal. In other words, the recent rise of NXPI call activity could be related to the unwinding of these arbitrage plays.

General Motors (GM)

General Motors isn’t saying its earnings sucked because of tariffs … but it was tariffs. In fact, the company went out of its way to make sure that the word “tariffs” didn’t appear at all in its second-quarter earnings release.

But, GM still slashed its full-year earnings outlook from $6.50 per share to $6 per share — citing cost inflation.  Additionally, GM’s CFO noted that “What happens beyond 2018, there’s a lot of uncertainty in this space at this point in time.”

Uncertainty is not something investors are very fond of. GM stock fell nearly 5% on the news, rattling options traders.

Volume in the GM options pits rose to 209,000 contracts, with activity split nearly down the middle. Furthermore, the August put/call OI ratio has risen in the past month to a reading of 0.81. In short, GM options traders are expecting more headwinds for GM before things get better.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.


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Article printed from InvestorPlace Media, https://investorplace.com/2018/07/thursdays-vital-data-advanced-micro-devices-nxp-semiconductors-and-general-motors/.

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