Friday’s Vital Data: Lululemon, Deutsche Bank and Nvidia

U.S. stock futures are trading higher heading into the final day of the quarter. According to CNBC, the S&P 500 is set to close its best first-quarter performance since 1998.

stock market todayAhead of the bell, futures on the Dow Jones Industrial Average are up 0.52% and S&P 500 futures are higher by 0.44%. Nasdaq-100 futures have added 0.49%.

In the options pits, yesterday’s low-volatility session did little to excite derivatives traders. Overall volume levels fell back with calls proving more popular than puts. Specifically, about 14.2 million calls and 12.8 million puts changed hands on the session.

Interestingly, the CBOE single-session equity put/call volume ratio continued its climb, notching a new three-week high at 0.71. rose to 0.59 — a two-week high. Meanwhile, the 10-day moving average edged higher to 0.61.

Today we’ll highlight three stocks that options traders fell in love with yesterday. Lululemon (NASDAQ:LULU) soared to record heights following a stellar earnings report. Deutsche Bank (NYSE:DB) fell 3% amid heavy put trading. Finally, Nvidia (NASDAQ:NVDA) is forming a high base pattern ahead of its next breakout.

Let’s take a closer look:

Lululemon (LULU)

Lululemon shareholders scored big yesterday following a rousing earnings report. LULU stock ended the day up 14% amid massive volume. The apparel company saw revenue rise 26% versus a year ago to $1.17 billion. Analysts were expecting around $1.15 billion. With the robust sales numbers, LULU raked in earnings of $1.85 per share, easily surpassing the Street’s estimates of $1.74.

LULU’s close of $167.54 marks a new record high and reaffirms the bulls’ dominance. The one-two combo of strong earnings and sales growth and a powerful price chart make LULU a must have in your watchlist. If a pullback arrives in the coming days due to profit taking, consider it a buying opportunity.

Trading volumes went bananas in the options pits. Surprisingly, puts kept pace with calls despite the bullish bonanza on the price front. Activity rocketed to 1,131% of the average daily volume, with 152,125 total contracts traded. Calls accounted for 52% of the total.

The expected move heading into earnings was 9%, so yesterday’s 14% moonshot delivered a win to traders holding long volatility trades like long straddles into the event. The post-earnings volatility crush was in full force driving implied volatility back down to 33%, or the 28th percentile of its one-year range.

Deutsche Bank (DB)

Deutsche Bank lagged LULU in popularity, if only slightly. The German banking behemoth suffered a bear raid in the stock and options market. On the equity side, DB fell 3.2% on its largest volume day since Feb. 1. The smack pushed DB stock to within a stone’s throw of its 52-week low at $7.62. With its share price firmly entrenched beneath all major moving averages, sellers maintain full and total control here.

On the options trading front, puts proved immensely popular and outpaced calls by a wide margin. Activity ballooned to 852% of the average daily volume, with 104,749 total contracts traded. 73% of the trading came from put options alone.

The demand surge lifted implied volatility to 53%, placing it at the 35th percentile of its one-year range. Premiums are now pricing in daily moves of 27 cents, or 3.3%.

Nvidia (NVDA)

Nvidia has quietly turned the corner. The price action in Q1 was extremely constructive, and the popular semiconductor company looks to be closing out the quarter at its high-water mark. Its year-to-date gains stand at 33%, and buyers have wrested back control of the short-term and intermediate-term trends. Since breaking out and rallying to a new five-month high, NVDA stock has formed a clear high base pattern on light volume.

This week’s pause has been extremely constructive and could be setting up the next up-leg.

In anticipation of this eventuality, traders took to the options market Thursday to jockey for positions. Activity wasn’t all that inspiring, yet it still landed in the top 10 list above. By days end the total trading came in at 76% of the average daily volume, with 148,283 total contracts traded. Calls added 68% to the sum.

Implied volatility edged lower to 42%, placing it at the 34th percentile of its one-year range. Premiums are baking in daily moves of $4.66, or 2.6%.

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.

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