U.S. stock futures are trading higher this morning as stocks attempt to extend their gains for the third day in a row. One of the key news items of the day is President Donald Trump’s plans to speak from the Oval Office tonight at 9 p.m. ET about the government shutdown.
In early morning trading, futures on the Dow Jones Industrial Average are up 0.91% and S&P 500 futures are higher by 0.8%. Nasdaq-100 futures have added 0.83%.
In the options pits, call volume won the day even as overall volume fell back from Friday’s surge. Specifically, about 19.4 million calls and 14.7 million puts changed hands on the session.
Over at the CBOE, the single-session equity put/call volume ratio remained virtually unchanged versus Friday’s reading, lifting slightly from 0.59 to 0.60. Meanwhile, the 10-day moving average fell to 0.69 — a new two-week low.
Here were three stocks landing atop the most-active options list. Roku (NASDAQ:ROKU) was flooded with activity after reporting rosy viewership numbers for Q4. AT&T (NYSE:T) options were hopping ahead of tomorrow’s ex-dividend date. Finally, Advanced Micro Devices (NASDAQ:AMD) shares were ripping as the Philadelphia semiconductor index topped off its best two-day rally since 2015.
Let’s take a closer look:
Roku stock is roaring back in a big way. Yesterday’s 25% rally amid jaw-dropping volume shows just how ripe the stock’s recent beatdown was for disruption. The pessimism pendulum had simply swung too far.
Investors were cheering the latest data released from the company surrounding their Q4 2018 performance. Standouts amid the update included a 40% increase in active accounts versus the same period last year, as well as a 68% year-over-year increase in streaming hours.
With the price jump, ROKU stock has now reversed its downtrend by climbing back above the 50-day moving average for the first time since its descent began in earnest last October.
On the options trading front, call options dominated trading. Activity ballooned to 413% of the average daily volume, with 112,084 total contracts traded. 68% of the trading came from call options.
Surprisingly, implied volatility dipped on the day to 78%, placing it at the 45th percentile of its one-year range. Though, to be fair, premiums were already pricing in substantial volatility. Now, the expected daily moves stand at $2.08 or 4.9%
AT&T shares are rising amid the broad market rally. But compelling valuations and a juicy dividend have delivered market-beating gains. Yesterday’s appearance on the most-active list was likely due to traders jockeying for positions in the options market ahead of Wednesday’s ex-dividend date.
The telecom titan will pay a 51-cent dividend which translates to a tasty annual yield (based on Monday’s closing price) of 6.6%.
On the options trading front, call options were the hot ticket. Activity ramped to 168% of the average daily volume, with 179,645 total contracts traded. Calls accounted for 70% of the day’s take.
Implied volatility held steady on the day at 28%, placing it at the 52nd percentile of its one-year range. Premiums continue to price in daily moves of 55 cents or 1.8%.
Advanced Micro Devices (AMD)
Semiconductor stocks are finally showing some spunk after getting weighed down amid the multimonth bruising in the Nasdaq last quarter. We can count AMD stock as one of the better performers during the rebound. Yesterday’s 8.3% jump sent the stock back above the 50-day moving average and a short-term descending trendline.
One of the potential drivers of the chip space is the upcoming CES conference in Las Vegas.
On the options trading front, traders came after calls throughout the day. Total activity increased to 60% of the average daily volume, with 331,877 total contracts traded. 60% of the day’s total originated from calls.
Implied volatility stayed pat throughout the trading session at 84%, keeping it at the 72nd percentile of its one-year range. Premiums are pricing in daily moves of $1.09 or 5.3%.
As of this writing, Tyler Craig didn’t hold a position in any of the aforementioned securities. Check out his recently released Bear Market Survival Guide to learn how to defend your portfolio against market volatility.