U.S. stock futures are trading are higher this morning as market indexes look to extend their winning streak to a third day.
The early morning gains come as investors prepare for a speech from Federal Reserve Chairman Jerome Powell at the Economic Club of New York.
Heading into the open, futures on the Dow Jones Industrial Average are up 0.65% and S&P 500 futures are higher by 0.45%. Nasdaq-100 futures have added 0.62%.
In the options pits, call volume once again ruled the day even as overall volume remained well below the panic-driven heights of October. Specifically, about 14.9 million calls and 13.3 million puts changed hands on the session.
At the CBOE, the single-session equity put/call volume ratio rose to 0.70. The 10-day moving average ticked slightly lower to 0.74.
Options activity was a mixed bag on Monday. Salesforce (NYSE:CRM) saw renewed options interest ahead of last night’s earnings report. United States Steel (NYSE:X) crashed 8% on fears of an economic slump. Finally, AT&T (NYSE:T) received a much-needed boost ahead of this week’s analyst meeting.
Let’s take a closer look:
Cloud stocks looking for relief from the ongoing slide found a savior in Salesforce last night. The popular software company reported quarterly earnings of 61 cents a share, excluding certain items, on revenue of $3.39 billion. Both numbers came in above the Street’s estimates.
CRM stock is currently up 8% pre-market and is buoying beaten-down tech stocks this morning.
On the options trading front, calls outpaced puts as traders jockeyed for positions ahead of last night’s conference call. Activity swelled to 375% of the average daily volume, with 113,232 total contracts traded. Calls accounted for 53% of the day’s take.
Options premiums were pricing in a 5% earnings move, so this morning’s 9% jump should deliver big gains to volatility buyers who bet on fireworks.
United States Steel (X)
The selling in steel stocks reached a fevered pitch yesterday. Metals kingpin, United States Steel, cratered 8.32% amid large volume. Its losses add salt to an already festering wound. Since peaking at $47.64 in March, X stock has lost over half of its value.
Deteriorating economic data and fears of a slowdown in China have taken the wind out of the sails of steel stocks this year. Those fears manifested themselves yesterday in one of the largest distribution days of the year.
On the options trading front, traders came after puts with a vengeance. Activity rocketed to 403% of the average daily volume, with 140,991 total contracts traded. 65% of the trading came from call options alone.
The increased demand drove implied volatility higher on the day to 51%, placing it at the 56th percentile of its one-year range. Traders are now pricing-in daily moves of 3.2%
AT&T has been hampered by doubt over its growing debt burden and recent costly acquisition of Time Warner. At the end of the third quarter the company had $185 billion of debt. Excluding financial companies, AT&T has more debt than any other U.S. company.
The company is hosting an analyst meeting on Thursday. Depending on if they can dazzle the Street, we could see higher volatility in T stock which has fallen 22% year-to-date.
On the options trading front, calls were the hot ticket yesterday. Activity lifted to 140% of the average daily volume, with 123,824 total contracts traded. Calls contributed 71% to the amount.
Implied volatility is holding steady at 24% which places it at the 59th percentile of its one-year range. Traders are pricing in 1.5% daily moves.
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.