U.S. stock futures are inching higher as traders attempt to pare last week’s gut-wrenching losses. The gains come as most major indexes are testing the lower end of their two-month trading ranges.
In early morning trading, futures on the Dow Jones Industrial Average are down 0.02% and S&P 500 futures are higher by 0.02%. Nasdaq-100 futures have added 0.07%.
In the options pits, puts kept pace with calls on Friday. Specifically, about 22 million calls and 21.6 million puts changed hands on the session. Meanwhile, at the CBOE the single-session equity put/call volume ratio inched lower to 0.77 easing the panic readings from Thursday. The 10-day moving average held its ground at 0.68.
Here are three of the hottest stocks landing atop the most-actives list. Cronos (NASDAQ:CRON) was flooded with activity amid news that cigarette producer, Altria (NYSE:MO) was taking a $1.8 billion stake in the company. Tesla (NASDAQ:TSLA) notched a three-month high before succumbing to broad market weakness. Finally, American Airlines (NYSE:AAL) was a notable loser, falling 9.3% amid heavy distribution.
Let’s take a closer look:
Cronos Group (CRON)
Canadian cannabis company, Cronos, made an appearance on last week’s most-actives list on rumors that Altria may be buying the company. Well, where there is smoke, there’s fire.
On Friday CRON announced that Altria is buying a 45% stake for approximately $1.8 billion. The news sent CRON stock, which had previously popped on rumors of a deal, even higher by 22% to $12.72. With the surge, Cronos shares are now testing overhead resistance near $14.
On the options trading front, traders came after calls with a vengeance. Activity swelled to 381% of the average daily volume, with 94,736 total contracts traded. 68% of the trading came from call options alone.
With the cat now out of the bag, and CRON stock already pole-vaulting 22% on the news, implied volatility fell on the day from 125% to 110%. Admittedly, 110% is still lofty so expect further gyrations moving forward.
Tesla (TSLA)
Tesla shares have been a bastion of strength during the recent selling onslaught. While the S&P 500 is plumbing the depths, TSLA stock has been flying high. On Friday, Elon Musk’s flagship tagged a new three-month high and now remains a stone’s throw from new all-time highs.
Though TSLA eventually succumbed to broad market weakness and ended with a nasty bearish reversal candle, it remains above a rising 2o-day and 50-day moving average.
On the options trading front, calls slightly outpaced puts despite the sharp downside reversal in the stock. Total activity jumped to 252% of the average daily volume, with 367,185 total contracts traded. Calls contributed 55% to the day’s take.
Implied volatility held steady on the day at 63%, or the 38th percentile of its one-year range. Traders are pricing in daily moves of $14.23 or 4%.
American Airlines (AAL)
American Airlines suffered massive turbulence on Friday. Though most every stock was swept up in the selling frenzy striking the Street, the damage in AAL was particularly painful. By day’s end, the stock was down 9.3% amid massive volume.
The descent carried AAL back below its 50-day moving average and a short-term support pivot which means the daily trend has officially turned lower. Look for a re-test of its 52-week low of $30.24 in the coming weeks.
On the options trading front, calls were surprisingly the hot ticket. Total activity soared to 228% of the average daily volume, with 93,145 total contracts traded. About 82% of the trading came from call options alone.
Options demand lifted dramatically on the day buoying implied volatility higher to 52% or the 84th percentile of its one-year range. Traders are pricing-in daily moves of $1.10 or 3.3%.
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.
