U.S. stock futures are trading lower after February’s jobs report missed expectations by a mile. For the month, the U.S. economy only added 20k jobs. Economists were expecting 180k jobs.
Tack on weak data from China revealing its exports shrunk 20% compared to a year earlier, and global economic slowdown fears have now been thrust to the forefront.
Against this backdrop, futures on the Dow Jones Industrial Average are down 0.97% and S&P 500 futures are lower by 0.96%. Nasdaq-100 futures have lost 1.19%.
In the options pits, put volume spiked sharply yesterday and outpaced call demand for the first time in weeks. Specifically, about 19.4 million calls and 20.1 million puts changed hands on the session.
The dash for crash protection made waves at the CBOE with the single-session equity put/call volume ratio ripping to 0.76 — just shy of its 2019 high. Meanwhile, the 10-day moving average popped to 0.64.
Options traders zeroed in on technology stocks yesterday. Here are three of the top contenders: Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN) and Facebook (NASDAQ:FB).
Let’s take a closer look:
Microsoft (MSFT)
Overhead resistance and a weak broad market conspired against Microsoft this week. The tech titan slipped 1.2% marking its third down day out of the last four. For now, however, the selling appears a garden variety pullback and nothing more.
Still, the uptick in options trading was enough to land MSFT stock on the most-actives leaderboard. From a trend perspective, buyers maintain control of the long-term, intermediate-term, and short-term moving averages. The next two support zones that could come into play are the 20-day moving average at $109.50 and a cluster of old pivots at $108.
On the options trading front, calls reigned supreme, notching 56% of the day’s take. Total activity swelled to 150% of the average daily volume, with 189,613.
The action in implied volatility suggests Thursday’s drop did little to stoke the flames of fear. Implied volatility fell to 19%, pushing it to the 8th percentile of its one-year range. Premiums are fast approaching their cheapest levels of the year. The daily expected moves are now $1.34, or 1.2%.
Amazon (AMZN)
Amazon’s breakout attempt was stopped short this week, reaffirming the importance of the $1,720 resistance zone. With yesterday’s 2.6% whack, the e-commerce king is returning to the lower-end of its narrow trading range.
The only news of note hitting the wires was Amazon’s announcing plans to shutter its pop-up retail stores in the United States.
Until its share price finally breaks out of the box it’s been locked in, directional bets are off the table. The aforementioned $1,720 marks critical resistance and $1,560 is the floor to watch.
On the options trading front, puts fell behind calls despite the favorable bearish backdrop. Total activity grew to 147% of the average daily volume, with 223,306 total contracts traded. The percentage breakdown for the day’s take was 58% calls to 42% puts.
Implied volatility held firm at 25%, placing it at the 28th percentile of its one-year range. The daily expected move is $25.69, which translates into 1.6%.
Facebook (FB)
Facebook stock suffered among its peers during the swoon, falling 2%. Fortunately, we didn’t see a groundswell in volume to signal any major institutional distribution. So, for now, the constructive price action we’ve seen since January’s robust earnings gap remains intact.
FB stock is set to gap lower by 1.76% this morning. If the downturn persists, watch for support near $160.
The story on the options front mirrored that of AMZN and MSFT. Calls accounted for 62% of the day’s total compared to 38% for puts. Activity did jump to 144% of the average daily volume, with 311,036 total contracts traded.
Implied volatility remained unimpressed, falling on the day to 23% or the 21st percentile of its one-year range. With that, options are officially cheap and pricing in daily moves of $2.41 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.
