Tuesday’s Vital Data: General Motors, Ford and Apple

Options activity provides a look at expectations on GM, F and AAPL

By Tyler Craig, Tales of a Technician

http://bit.ly/2P5yrCO

U.S. stock futures are trading modestly lower as President Donald Trump’s tariff comments take a bite out of Apple (NASDAQ:AAPL). In an interview with the Wall Street Journal, the President said he might place a 10% tariff on iPhones and laptops imported from China.

stock market todayThe threat sent AAPL shares skidding 2% after hours and is causing the Nasdaq-100 to lead the major market indexes lower.

Ahead of the bell, futures on the Dow Jones Industrial Average are down 0.4% and S&P 500 futures are lower by 0.41%. Nasdaq-100 futures have shed 0.53%.

In the options pits, call activity ruled the day even as overall volume remained well below recent average levels. Specifically, about 15.7 million calls and 13.4 million puts changed hands on the session.

The ebb in put demand made waves over to the CBOE, where the single-session equity put/call volume ratio cratered to 0.64 — a three-week low. The 10-day moving average fell back to 0.75.

Options traders zeroed in on automakers yesterday. General Motors (NYSE:GM) shares jumped just shy of 5% on restructuring plans. Ford (NYSE:F) got in on the action with a rally of its own. Finally, Apple (NASDAQ:AAPL) carved out a bullish reversal candle that is being dismantled after hours on Trump’s tariff talk.

Let’s take a closer look:

General Motors (GM)

The Detroit-based automaker announced the details of their restructuring plans for 2019. The broad changes involve slashing 14,000 workers as they shutter seven factories worldwide by the end of 2019.

Wall Street cheered the news, rewarding GM stock with a 4.8% gain on heavy volume. The recent price action marks a turnaround for the company. Spurred by its latest earnings release and yesterday’s cost-cutting news, General Motors now finds itself above all major moving averages for the first time since June. Along the way, distribution days have dried up showing institutional selling pressure has disappeared.

On the options trading front, traders came after calls with a vengeance. Activity swelled to 265% of the average daily volume, with 127,784 total contracts traded. 61% of the trading came from call options alone.

Implied volatility held steady on the day at 34% placing it at the 53rd percentile of its one-year range. Traders are pricing in daily moves of 2.1%

Ford (F)

News for Ford was light on Monday, but its shares were buoyed up alongside GM. Shares of the automaker finished the day 3% higher clearing the 20-day and 50-day moving averages in the process.

The increased options trading was enough to place it alongside GM atop the most-actives list.

Traders favored calls all day. Activity lifted 103% of the average daily volume, with 102,926 total contracts traded. Calls accounted for 78% of the day’s take.

Implied volatility moved sideways on the day at 34% or the 43rd percentile of its one-year range. Currently, traders are pricing in 2% daily moves.

Apple (AAPL)

When it rains, it pours. Apple’s woes include disappointing earnings, weak forward guidance, tepid iPhone demand and now talk of new tariffs targeting iPhones and laptops imported from China.

With its ongoing price slide (25% off its highs) AAPL has also relinquished the coveted title of the most valuable company on the planet to none other than Microsoft (NASDAQ:MSFT).

On the options trading front, calls outpaced puts as Apple scored its first up day in five trading sessions. Activity ended at 92% of the average daily volume, with 613,174 total contracts traded. Calls were 62% of the total.

Implied volatility fell slightly on the day to 35% placing it at the 72nd percentile of its one-year range. Traders are pricing in daily moves of 2.2%

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.


Article printed from InvestorPlace Media, https://investorplace.com/2018/11/tuesdays-vital-data-general-motors-ford-and-apple/.

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