U.S. stock futures are inching higher this morning as buyers continue to press their advantage. Ahead of the bell, futures on the Dow Jones Industrial Average are up 0.51% and S&P 500 futures are higher by 0.42%. Nasdaq-100 futures have added 0.53%.
In the options pits, call volume followed the usual script — outpacing puts by a modest margin. Specifically, about 18.7 million calls and 15 million puts changed hands on the session.
At the CBOE, the single-session equity put/call volume ticked higher to 0.63. Meanwhile, the 10-day moving average fell to a new two-month low at 0.64.
Here were three key stocks atop Wednesday’s most-active list. Verizon (NYSE:VZ) saw renewed options interest after reporting strong Q4 metrics. Tilray (NASDAQ:TLRY) benefited from an optimistic analyst note. Finally, Square (NYSE:SQ) saw above-average activity as the stock notched its third up day in a row.
Let’s take a closer look:
The rebound in Verizon hit its stride yesterday with a powerful breakout through the 50-day moving average on above-average volume. With the rally, VZ stock now sits a stone’s throw from record highs, and its uptrend has arguably been re-established.
Investors cheered the telecommunication giants freshly released Q4 metrics included better-than-expected customer loyalty rates.
Another reason why options were such a hot commodity is Wednesday’s ex-dividend date. Shareholders of record will qualify for the quarterly dividend payout of 60 cents which translates to an annual yield of 4.17%.
On the options trading front, call volume experienced its quarterly explosion. Total activity rocketed to a whopping 1,160% of the average daily volume, with 412,006 total contracts traded. 92% of the trading came from call options alone as traders sought ownership of the stock to qualify for the dividend payout.
Implied volatility slipped lower on the day to 24%, placing it at the 47th percentile of its one-year range. Premiums are now pricing in daily moves of 89 cents or 1.5%.
You know speculative behavior is returning to the marketplace when marijuana stock Tilray lands on the top gainer’s list. Shares of the Canadian-based company jumped 15.8% higher amid strong volume after a Cowen analyst penned a bullish note to clients about the potential for Tilray and Canopy Growth (NYSE:CGC) to deliver strong performance in 2019.
Recently, TLRY has been drifting sideways with little momentum in either direction, so the news is bringing a much-needed boost and directional clarity. With the stock still below a descending 50-day moving average, however, more work remains before the trend completes its turn higher.
On the options trading front, calls dominated the session. Total activity swelled to 284% of the average daily volume, with 87,006 total contracts traded. Calls accounted for 67% of the day’s take.
The increased demand drove implied volatility higher on the day to 136%.
With little news to speak of, Square’s addition to the most-active options list yesterday was likely driven by investor optimism surrounding its rebound. Square shares rallied for a third day in a row bringing the total recovery off of Decembers lows to a 27% gain.
But the coast is not clear — multiple overhead resistance levels loom, including the descending trendline that has defined the three-month decline as well as the 50-day and 200-day moving averages.
On the options trading front, calls were the winners of the day. Total activity climbed to 143% of the average daily volume, with 134,046 total contracts traded. Calls added 68% to the session’s take.
The stock’s rally continues to bring implied volatility down from its panic-induced heights. It now stands at 64%, or the 52nd percentile of its one-year range. Premiums are pricing in daily moves of $2.55 or 4%.
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.