U.S. stock futures are trading slightly lower as traders return to their trading turrets for a holiday-shortened week. Global trade tensions continue to dominate the headlines, and Apple (NASDAQ:AAPL) shares are weighing on the Nasdaq following reports that they are cutting production orders for all three new iPhone models by a third.
Against this backdrop, futures on the Dow Jones Industrial Average are down 0.33% and S&P 500 futures are lower by 0.37%. Nasdaq-100 futures have shed 0.61%.
In the options pits, calls outpaced puts on the day. Specifically, about 23.4 million calls and 18.6 million puts changed hands on the session.
Over to the CBOE, the single-session equity put/call volume ratio remained virtually unchanged at 0.74. The 10-day moving average continued its climb to 0.7.
Options activity was a mixed bag on Wednesday (Options traders zeroed in on analyst actions yesterday). Nvidia (NASDAQ:NVDA) saw renewed options interest after crashing on disappointing earnings. Verizon (NYSE:VZ) scored a price breakout to fresh 19-year highs. Finally, Facebook (NASDAQ:FB) options were active as its ongoing slide tagged a new 52-week low.
Let’s take a closer look:
Nvidia (NVDA)
Nvidia shares crashed 19% on Friday after reporting disappointing earnings and guidance. Heading into the release, the semiconductor industry was already under pressure, so the losses only served to add insult to injury. NVDA reported earnings per share of $1.84 on revenue of $3.18 billion. With Friday’s damage, the tally for the stock’s ongoing bear market has now risen to a 44% decline.
The primary culprit for the lackluster numbers was slowing demand for NVIDIA’s graphics cards that were once being gobbled up by crypto miners. The slack in demand is causing the inventory of the company’s Pascal-GPU-based graphics cards to pile up.
On the options trading front, calls and puts were balanced on the day. Activity swelled to 369% of the average daily volume, with 526,821 total contracts traded. Calls accounted for 51% of the day’s take.
Implied volatility fell to 55% or the 54th percentile of its one-year range. Option premiums are now pricing in daily moves of 3.5%.
Verizon (VZ)
Telecom giant Verizon scored a rousing breakout Friday, sending the stock to a new 19-year high. The steady dividend-paying giant has seen its gains accelerate during the market correction. It’s low beta and high dividend yield are proving an attractive alternative to the volatile price action inflicting traders elsewhere.
With the fresh price highs and rising moving averages bolstering the trend, VZ stock has one of the best-looking price charts on the Street.
On the options trading front, traders came after calls with a vengeance. Activity inflated to 207% of the average daily volume, with 88,450 total contracts traded. 71% of the trading came from call options alone.
Implied volatility remains nestled at 20% or the 34th percentile of its one-year range. Traders are pricing in daily moves of 1.3%.
Facebook (FB)
Ever since the July earnings release, Facebook has been unable to arrest its decline. The consistency with which bears have sold each and every rally signals just how entrenched their power has become. From peak-to-trough the bear market has now stolen 36% of FB stock’s price.
Despite the lack of news, Facebook shares skidding to a new 52-week low was enough to light a fire under their options trading.
Calls were modestly more popular than puts accounting for 56% of the day’s total. Activity ramped to 144% of the average daily volume, with 439,225 total contracts traded.
Implied volatility has been hovering near 36% or the 56th percentile of its one-year range. Traders are pricing in daily moves of $3.20 or 2.3%.
As of this writing, Tyler Craig didn’t hold positions in any of the aforementioned securities. Want insightful education on how to trade? Check out his trading blog, Tales of a Technician.
