U.S. stock futures are mixed this morning. Corporate earnings remain front and center, with strong results from Morgan Stanley (NYSE:MS) helping to boost market sentiment.

Traders will also keep an eye on Federal Reserve Chairman Jerome Powell’s second day of testimony in Washington — this time before the House Financial Services Committee.

Finally, economic data could have an impact. June housing starts came in lower than expected, at 1.173 million, and the Fed’s Beige Book hitting this afternoon.

Against this backdrop, futures on the Dow Jones Industrial Average are off by 0.02%. Meanwhile, S&P 500 futures have lost 0.09% and Nasdaq-100 futures have slipped 0.16%.

In options activity, volume recovered a bit on Tuesday, but remained below average despite a thickening earnings season. Overall, about 17.4 million calls and 14.1 million puts changed hands on the session. On the CBOE, the single-session equity put/call volume retreated to 0.65. The 10-day moving average held its ground at 0.62.

Options traders are heavily focused on tech-sector earnings this week. Microsoft (NASDAQ:MSFT) saw more than double its average options volume ahead of tomorrow’s report.

Facebook (NASDAQ:FB) also drew a spike in options activity despite earnings arriving next week. Finally, NXP Semiconductors (NASDAQ:NXPI) is staring down next week’s deadline for merger approval with Qualcomm (NASDAQ:QCOM).

Let’s take a closer look:

Microsoft (MSFT)

The clock is ticking down to Microsoft’s quarterly earnings report tomorrow. Sentiment is running high on Wall Street, especially after Microsoft announced that it was teaming up with Walmart (NYSE:WMT) to battle Amazon.com (NASDAQ:AMZN) in the cloud.

By the numbers, analysts are expecting Microsoft to report a profit of $1.08 per share on revenue of $29.21 billion (up 18.2% year-over-year). EarningsWhispers.com puts the whisper number at $1.12 per share.

Options traders, meanwhile, piled into calls heading into the event. Volume topped 275,000 contracts, with calls snapping up 66% of the day’s take — which is well above average for MSFT.

Despite the bullishness, July implieds are only pricing in a potential post-earnings move of about 3.5% for MSFT. This puts the potential downside near $102 and the potential upside just shy of $110.

Facebook (FB)

FB stock has continued its impressive breakout rally this week, as the shares surge off their March lows near $152. The stock is set to open this morning north of $210, and options traders appear to be betting on additional upside following earnings.

Analysts are anticipating a profit of $1.72 per share when Facebook reports next Wednesday. Revenue is expected to rise 43.5% to $13.38 billion. That said, many on Wall Street have indicated much higher expectations, with EarningsWhispers.com putting the whisper number at $1.90 per share.

Options traders remain overall bullish, though there is some skepticism beginning to creep in. For instance, calls only made up 59% of yesterday’s total volume of over 248,000 contracts. This is well off the typical call daily percentage of 65% of total volume.

As for weekly July 27 options (i.e., those most affected by next week’s earnings), the put/call open interest ratio stands at 0.58. In short, calls remain in charge for FB stock, but there are signs that options traders are preparing for a potential drop following the event.

NXP Semiconductors (NXPI)

Time has almost run out for Qualcomm’s acquisition offer for NXP Semiconductors. The duo extended the timeframe for the deal back in April, setting July 25 as the new deadline. However, this was back when there was hope that the U.S./China trade war would ease and regulators would approve the $43 billion deal.

No such luck, and unless a miracle happens in the next seven days, many analysts expect the duo to call off the deal. For NXP, that means a $2 billion breakup fee that some expect could be used for a stock buyback.

Options traders are certainly interested in the outcome. Volume on NXPI yesterday soared to 178,000 contracts, or more than 226% of NXP’s daily average. That said, most of this activity has been focused on back-month option series, and not the weekly July 27 series. Still, the put/call OI ratio for next week’s options expiration comes in at 0.58, hinting at a fair degree of optimism for NXPI shares ahead of the deadline.

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

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