Friday’s Vital Data: Disney, Amazon and Wells Fargo

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U.S. stock futures are still uncertain following this morning’s weaker-than-expected jobs report. Any signs of economic weakness will provide ammo for those hoping the Federal Reserve will adopt a less aggressive tone on interest rate hikes.

Friday's Vital Data: options Trading in Disney, Amazon and Wells FargoElsewhere, oil prices are soaring 4.5% on hopes of an OPEC production cut.

Against this backdrop, futures on the Dow Jones Industrial Average are up 0.06% and S&P 500 futures are lower by 0.02%. Nasdaq-100 futures have dropped 0.15%.

In the options pits, put volume spiked sharply yesterday, helping to drive overall volume well above average levels. Specifically, about 23.2 million calls and 23.8 million puts changed hands on the session.

The explosion in put trading made waves over at the CBOE, where the single-session equity put/call volume ratio rocketed to 0.85 – its second-highest reading of the year. The 10-day moving average edged higher to 0.68.

Here are three stocks that landed atop the options most-actives list. Disney (NYSE:DIS) saw renewed options interest after as buyers swooped in to grab the early morning discount. Amazon (NASDAQ:AMZN) calls were popular as the tech sector largely led the market turnaround. Finally, Wells Fargo (NYSE:WFC) rocketed back from a critical support test.

Let’s take a closer look:

Disney (DIS)

Mickey Mouse’s flagship has proven a safe haven this quarter. While the rest of the market is plumbing the depths, Disney stock is treading water just beneath record highs. Its muscle-flexing was on full display yesterday as bulls swarmed to buy up the early morning weakness and jam the stock well into the green by day’s end. DIS stock finished up 0.8% and is close to reclaiming its 50-day moving average.

The news was light yesterday, so the mad dash for derivatives was driven by technicals.

On the options trading front, traders came after calls with a vengeance. Activity swelled to 207% of the average daily volume, with 99,017 total contracts traded. About 69% of the trading came from call options alone.

The increased demand drove implied volatility higher on the day to 24%, placing it at the 45th percentile of its one-year range. Traders are pricing-in daily moves of $1.71 or 1.5%.

Amazon (AMZN)

Tech stocks were one of the first sectors to turn green after yesterday morning’s bloody open, and Amazon proved a leader of the pack by finishing the day up 1.8%. Though that may not sound like much, keep in mind that it started the day by gapping 3.2% lower. The intraday turnabout was impressive.

Like Disney, noteworthy news was lacking for AMZN. It finds itself a victim of broad market volatility driven by the usual suspects — tariffs, trade war and economic slowdown fears.

On the options trading front, calls outpaced puts throughout the session. Total activity climbed modestly to 129% of the average daily volume, with 266,661 total contracts traded. Calls accounted for 57% of the day’s take.

Implied volatility inched higher on the day to 39%, placing it at the 68th percentile of its one-year range. Traders are pricing in daily moves of $42.22, or 2.5%.

Wells Fargo (WFC)

According to a Wall Street Journal report on Wednesday, Wells Fargo is firing around three dozen regional managers for “oversight failures” surrounding the 2016 sales scandal that rocked the company. While cleaning house is a positive, the price moves in WFC stock this week are likely a function of bigger-picture trends driving bank stocks like inverted yield curve fears.

$50 is the price zone to watch for WFC. It marks the low 0f 2018 and has provided support many times. Buyers swarmed to defend their turf yesterday, and their continued vigilance will be needed if Wells Fargo is going to be able to sidestep a major breakdown.

On the options trading front, calls were the clear winner on the day. Activity ballooned to 286% of the average daily volume, with 124,149 total contracts traded. Calls contributed 57% to the total.

Implied volatility soared over the past two trading sessions to 33% placing it at the 90th percentile of its one-year range. Traders are pricing-in daily moves of $1.06, or 2.1%.

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.

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Article printed from InvestorPlace Media, https://investorplace.com/2018/12/fridays-vital-data-disney-amazon-and-wells-fargo/.

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