U.S. stock futures are pushing higher this morning. The market is set for a positive open, with sentiment improving toward U.S. trade relations. Specifically, the U.S. and China reportedly hope to resolve trade dispute issues by November. However, 25% tariffs on $16 billion in Chinese imports go into effect this week. China is expected to retaliate.
Meanwhile, Turkey remains front and center this week, as the lira and Turkish stocks have plunged recently due to high inflation and political instability. Furthermore, Italy is also emerging as a potential spoiler with its own growing debt issues.
Against this backdrop, futures on the Dow Jones Industrial Average are up 0.19% with S&P 500 futures adding 0.14%. Nasdaq-100 futures, meanwhile, have rallied 0.19%.
In the options pits, volume was brisk on Friday. Overall, about 23.1 million calls and 18.6 million puts changed hands on the session. On the CBOE, the single-session equity put/call volume ratio jumped to 0.7. The 10-day moving average vaulted to a three-week high of 0.65.
Options traders continued to ride the Apple (NASDAQ:AAPL) rally on Friday. Meanwhile, the Tesla (NASDAQ:TSLA) trainwreck was also unavoidable in the options pits. Finally, Nvidia (NASDAQ:NVDA) options traders were divided following weak earnings guidance. Let’s take a closer look:
Apple (AAPL)
AAPL stock has had an excellent August so far. The shares are up more than 16.7%, driven by a strong quarterly earnings report at the beginning of the month. Apple has now well surpassed the $1 trillion valuation market.
The shares gained another 2% on Friday following a report that AAPL stock now comprises 24% of Warren Buffet’s Berkshire (NYSE:BRK.A, NYSE:BRK.B) portfolio.
In the options pits, that enthusiasm translated into additional call volume for AAPL stock. Total volume rose to nearly 1.1 million shares, with calls claiming 60% of the day’s take. Despite the strong day for calls, they still came up short of average for Apple, which tends to arrive in the 63% range.
Turning our attention to September, we find a surprising degree of pessimism levied against AAPL stock. Specifically, the put/call open interest ratio comes in at a lofty reading of 1.24 — the highest such reading taken in the past year. It would appear that AAPL traders are being rather cautious and selling premium or betting heavily against the shares holding their $1 trillion valuation.
Tesla (TSLA)
If Tesla CEO Elon Musk’s aim was to sink short sellers, he has failed miserably. According to a report from S3 Partners, TSLA shorts have made $1.2 billion since Musk’s “going private” tweet. That’s gotta hurt Musk’s pride more than a little.
In fact, TSLA stock had its worst week since 2016 after the shares plunged over 8% on Friday following a Musk interview with The New York Times. In the interview, the Tesla CEO said it has been a very difficult year for Tesla and that the worst was yet to come. Investors didn’t like that sentiment at all.
Options traders chased TSLA stock lower. Volume on Friday rose to over 595,000 contracts, more than doubling the stock’s daily average. Puts claimed 57% of the day’s take — well above average for even Tesla.
What’s more, the September put/call OI ratio is just as bearish as you would expect, coming in at 2.51. In other words, there are now twice as many puts open in September as there are calls. Furthermore, quite a few of those puts are at deep out-of-the-money strikes, like the $200, $100 and even the $50-strike put.
Nvidia (NVDA)
Live by the crypto market, die by the crypto market. Nvidia speculators found that out the hard way last week. After the close on Thursday, Nvidia reported better-than-expected second quarter revenue and earnings.
However, citing a collapse in crypto demand, Nvidia also placed third-quarter revenue guidance at $3.25 billion, plus or minus 2% — below consensus expectations for $3.34 billion.
As a result, NVDA stock dropped nearly 5% on Friday. Options traders were divided, however, on how to proceed. Volume soared to 407,000 contracts, or more than quadruple NVDA’s daily average. Calls squeaked out 51% of the day’s take.
As for September, the put/call OI ratio rests at a bearish-leaning 0.84. Calls still remain in control, but bearish puts are gaining ground. However, with crypto expectations reset, NVDA may begin to trade on its own merits instead of speculation.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
