Monday’s Vital Data: Nutanix, Amazon and Tesla

U.S. stock futures are pointing to a higher open as traders return from the weekend. The catalyst for buyers’ dominance is a Wall Street Journal report over the weekend that suggests the ongoing talks surrounding a U.S.- China trade deal are entering the final innings.

Monday's Vital Data: Nutanix, Amazon and TeslaAgainst this backdrop, futures on the Dow Jones Industrial Average are up 0.35% and S&P 500 futures are higher by 0.34%. Nasdaq-100 futures have added 0.54%.

Friday’s rally halted the four-day lull that settled on equities last week. Now we see if bulls can press their bets and finally break through the 2,800 resistance zone for the S&P 500. In the options pits, call volume jumped helping to drive overall volume above average levels. Specifically, about 20.6 million calls and 16.3 million puts changed hands on the session.

At the CBOE the single-session equity put/call volume ratio slipped to 0.60. Meanwhile, the 10-day moving average held its ground near a five-month low at 0.59.

Options activity was hot in these three companies. Nutanix (NASDAQ:NTNX) lost some $3 billion in market value after a terrible earnings release. Amazon (NASDAQ:AMZN) scored a high volume rally Friday that could signal its month-long consolidation is ending. Finally, Tesla (NASDAQ:TSLA) shares slumped after reporting fresh details about its new low-cost offering of the Model 3.

Let’s take a closer look:

Nutanix (NTNX)

The clouds are darkening for Nutanix after a gloomy earnings report sent investors fleeing. The cloud-computing company that went public in late-2016 plunged 32.72% on Friday due to terrible revenue guidance for its fiscal third quarter of 2019. Management said they expected to lose 60 cents per share on revenue ranging from $290 to $300 million. Analysts were anticipating losses of 28 cents on revenue of nearly $348 million.

With the freefall, some $3 billion of market value has been lost. Not surprisingly, NTNX stock now finds itself firmly in the grasp of sellers. Support levels were shattered left and right on Friday giving Nutanix little left to stand on.

On the options trading front, puts and calls ended the day at a tie. Activity ballooned to 1,053% of the average daily volume, with 109,309 total contracts traded. The total was split 50-50 between calls and puts.

Implied volatility fell on the day to 56% lacing it at the 29th percentile of its one-year range. Premiums are now pricing in daily moves of $1.18 or 3.5%.

Amazon (AMZN)

If Friday’s surge is any indication, the tight band of consolidation in Amazon stock is coming to an end. Ever since the early-January rally slammed into the 200-day moving average, AMZN stock has been slithering sideways. But with momentum building beneath the surface and continued strength in the tech sector, it’s high time for AMZN to play catch-up.

Buyers scored a minor victory when they sent the stock above short-term resistance at $1,660. The groundswell in volume helps validate the resistance breach suggesting that higher prices are in the offing.

On the options trading front, traders came after calls all day long. Activity grew to 177% of the average daily volume, with 279,834 total contracts traded. Calls added 61% to the session’s take.

The sluggish price movement is keeping a lid on implied volatility which ended the day at 23%. That places it at the 24th percentile of its one-year range. Premiums are pricing in daily moves of $24.71 or 1.5%.

Tesla (TSLA)

Tesla announced that it would finally be launching a $35,000 version of its Model 3 last week, but investors were mostly underwhelmed by the details accompanying the announcement. To make the lower cost a possibility, Tesla is shuttering many of its stores and moving sales entirely online.

Additionally, CEO Elon Musk said the company wouldn’t be profitable in Q1.

On the options trading front, volume swelled but was almost equally split between calls and puts. Activity climbed to 320% of the average daily volume, with 603,792 total contracts traded.

The increased uncertainty lifted implied volatility higher to 63% placing it at the 35th percentile of its one-year range. Premiums are now baking in daily moves of $11.65 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.

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