Tuesday’s Vital Data: Netflix, Amazon.com and Advanced Micro Devices

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U.S. stock futures are trading lower this morning. Wall Street is being pressured by Netflix (NASDAQ:NFLX), which missed subscriber and revenue expectations after the close yesterday. Additionally, traders remain cautious ahead of Federal Reserve Chairman Jerome Powell’s testimony before the Senate Banking Committee later this morning.

stock market todayAgainst this backdrop, futures on the Dow Jones Industrial Average are roughly flat. Meanwhile, S&P 500 futures are down 0.12% and Nasdaq-100 futures have slipped 0.15%.

In options activity, volume was surprisingly anemic yesterday. In fact, only about 15.1 million calls and 12.5 million puts changed hands on the session. On the CBOE, the single-session equity put/call volume rose to 0.70. The 10-day moving average held its ground at 0.62.

Options traders remained focused on corporate earnings yesterday, with Netflix at the top of that list. Meanwhile, Amazon.com (NASDAQ:AMZN) drew call activity despite Prime Day glitches on its website. Finally, Advanced Micro Devices (NASDAQ:AMD) received another price-target hike, this time from Stifel Nicolaus.

Let’s take a closer look:

Tuesday’s Vital Options Data: Netflix, Amazon.com and Advanced Micro Devices

Netflix (NFLX)

NFLX stock is down more than 12% in premarket trading this morning following yesterday’s disastrous quarterly earnings report. Both second-quarter revenue and subscriber growth came up short of expectations. Subscriber numbers were the most shocking, however.

Netflix said it added 5.2 million users on the quarter, down sharply from its April forecast for 6.2 million. Overall, Netflix added 4.47 million international subscribers and 670,000 domestic subscribers, versus prior guidance for 5.9 million and 1.2 million, respectively.

NFLX options traders showed some signs of caution ahead of the event. Volume rose to 314,000 contracts, with calls only eking out 56% of the day’s take. What’s more, the July put/call open interest ratio rose overnight from 0.87 yesterday to 0.90 today. In other words, yesterday’s call activity was likely liquidation of existing positions ahead of last night’s report.

Amazon.com (AMZN)

Amazon.com kicked off Prime Day yesterday — a 24-hour sales event filled with special low-price deals for Prime members only. However, Prime Day started off with some technical difficulties. Specifically, Amazon.com’s website wouldn’t load properly (or sometimes not at all), teasing Prime members with active deals, but not allowing them to add them to their cart.

While somewhat amusing, the website troubles only moderately impacted AMZN stock options activity. Volume yesterday came in at 231,000 contracts, or about 1.3 times AMZN’s daily average. Calls scraped together 57% of yesterday’s activity.

While Prime Day sales won’t be a part of the headline results, Amazon will step up to report earnings on Thursday next week. Options traders appear to be betting bearishly ahead of the event.

Specifically, the weekly July 27 put/call OI ratio comes in at 1.57, up from a reading of 1.51 taken this past Friday. The pace of put adds may now pick up following Netflix’s earnings debacle.

Advanced Micro Devices (AMD)

Late last month, Bank of America stepped up to boost it’s price target on AMD following the surprise departure of Intel’s (NASDAQ:INTC) CEO. Yesterday’ Stifel Nicolaus lifted its price target to $21 from $17 while reiterating it’s “buy” rating on AMD stock.

The ratings firm cited strong sales for AMD’s Zen-based CPU line. “The surprise upside may come from the company’s Epyc server CPU gaining traction ahead of consensus expectations for 5% unit market share exiting 4Q18,” Stifel Nicolaus wrote in a note to clients.

AMD stock rose nearly 2% following the note, and options traders chased the rally. Volume rose to 166,000 contracts, with calls making up 70% of the day’s take. Much of that activity took place in the weekly July 27 series, which expires just after AMD reports earnings on July 25.

Currently, the weekly July 27 put/call OI ratio comes in at a lowly reading of 0.4. In other words, calls are more than twice as popular as puts heading into AMD’s earnings report.

As of this writing, Joseph Hargett held Advanced Micro Devices (AMD) stock.


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Article printed from InvestorPlace Media, https://investorplace.com/2018/07/tuesdays-vital-data-netflix-amazon-com-and-advanced-micro-devices/.

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