U.S. stock futures are heading for a sleepy open. Yesterday’s release of the minutes from the Federal Reserve’s recent meeting did little to change the bullish trajectory of the market. Small-caps continued their dominance on Wednesday, logging their eighth consecutive up day.
In early morning trading, futures on the Dow Jones Industrial Average are down 0.14% and S&P 500 futures are lower by 0.18%. Nasdaq-100 futures have shed 0.17%.
In the options pits, call volume bounced back, helping to drive overall volume closer to average levels. Specifically, about 18.9 million calls and 15 million puts changed hands on the session.
At the CBOE, call popularity drove the single-session equity put/call volume ratio back to 0.54. Meanwhile, the 10-day moving average remain unchanged at 0.60.
Options activity was a mixed bag on Wednesday, as options traders zeroed in on analyst actions. Ford (NYSE:F) surged this week after its low valuation and juicy dividend yield finally attracted buyers. eBay (NASDAQ:EBAY) call volume jumped even as traders hit the pause button on its impressive recovery. Finally, Apple (NASDAQ:AAPL) calls were hot as the stock tried to break out of its narrow trading range.
Let’s take a closer look:
Ford (F)
Buyers are finally coming after beaten-down Ford shares. The ailing automaker scored its third consecutive accumulation day and is testing overhead resistance at $9. A breakout has the potential to push F stock into the next stage of its bottoming process.
All was quiet on the news front this week, so the buying binge is likely a byproduct of the broader enthusiasm driving the overall market higher. The low valuation and juicy 6.7% dividend yield seem to have dumpster divers finally taking note.
The bulls’ enthusiasm spilled into the options market, placing Ford on the most-actives leaderboard. Activity swelled to 185% of the average daily volume, with 162,191 total contracts traded. 76% of the trading came from call options alone.
Implied volatility slipped lower on the day to 31%, placing it at the 28th percentile of its one-year range. Premiums are pricing in daily moves of 18 cents, or 2%.
eBay (EBAY)
Excitement over eBay’s continued turnaround pushed the e-commerce giant into the most active options list. As with Ford, market-moving news in eBay was absent yesterday, so let’s take an updated look at its price action.
The low bar set after the stock fell as much as 45% last year was surpassed this earnings season. Indeed, since the turn of the year, EBAY shares have been rocketing higher, virtually uninterruped. With the stock on the cusp of finally filling its earnings gap from two quarters ago, sellers finally scored a down day.
Nonetheless, calls absolutely dominated the session. Total activity grew to 140% of the average daily volume, with 101,116 total contracts traded. Calls accounted for 89% of the tally.
Implied volatility has been climbing this week and now sits at 31% or the 41st percentile of its one-year range. At present, premiums are pricing in daily moves of 71 cents which translates into 1.9%.
Apple (AAPL)
Apple has been locked in a narrow trading range for seven trading sessions. But yesterday it finally tried to break out. Though the attempt ultimately failed, the excitement was enough for AAPL to clinch the tenth spot on Wednesday’s most-actives list.
Though the rally faded by the closing bell, the nascent uptrend for AAPL stock remains healthy. With the stock above the 20-day and 50-day moving averages, not to mention the bubbly sentiment driving stock indexes to the moon, I see little reason to bet against more upside.
The theme of call popularity continued with Apple. Though activity only climbed to 90% of the average daily volume, with 428,571 total contracts traded, it was enough to land the make of all i-Things on the leaderboard.
Subdued movement has driven implied volatility into the tank. Yesterday it fell to the 22nd percentile of its one-year range. Premiums are pricing in daily moves of $2.37, or 1.4%.
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.
