Thursday’s Vital Data: Centene, Netflix and Apple


Heading into the open, U.S. stock futures are hovering near unchanged. The Dow Jones Industrial Average is up 0.04%, and S&P 500 futures are higher by 0.01%. Nasdaq-100 futures are about flat.

Thursday's Vital Data: Centene (CNC), Netflix (NFLX) and Apple (AAPL)The action in the option pits left little to talk about. Overall volume settled around average levels and calls slightly outpaced puts. Specifically, about 15.4 million calls and 14.9 million puts changed hands on the session.

There was enough anxiety in the air, however, to make some waves at the CBOE. The single-session equity put/call volume ratio bumped up to 0.69 — a three-week high. Meanwhile, the 10-day moving average climbed to 0.60.

Options traders were particularly active in the following stocks. Centene (NYSE:CNC) options exploded on news of striking a $15 billion deal to merge with WellCare (NYSE:WCG).  Netflix (NASDAQ:NFLX) shares continue to lose ground amid widespread profit-taking in the tech sector. Finally, Apple (NASDAQ:AAPL) ended its three-day slide by rallying just shy of 1%.

Let’s take a closer look:

Centene (CNC)

Centene made a rare appearance atop the options leaderboard after announcing a deal to merge with WellCare. CNC stock initially opened 8.6% lower but rallied back to close down 5% on the day. WellCare jumped 12.3% to the end the day at $259.81.

Since peaking last December, CNC shares have been slip sliding away. The volatile ride created a treacherous environment for traders. With yesterday’s plunge, the stock is now 30% off the highs and remains entrenched below all major moving averages. Rallies are suspect and bullish trades high risk until the technical posture improves.

On the options trading front, calls ruled the roost. Activity exploded to 3,606% of the average daily volume, with 120,291 total contracts traded. 58% of the amount came from call options.

Implied volatility rocketed higher on the day to 44%, placing it at the 89th percentile of its one-year range. Pumped up premiums are now pricing in daily moves of $1.45, or 2.8%.

Netflix (NFLX)

This week’s reveal of Apple’s new streaming service adds one more variable to an already growing pile of competition for Netflix. The reaction in NFLX stock has been tame, but with the broader market sliding at the same time it’s anyone’s guess as to how much of the selling is due to the Apple news.

With yesterday’s 1.8% drop, NFLX is testing its rising 50-day moving average. The trajectory of its 2019 recovery has slowed over the past month, giving momentum watchers something to worry about. For now, bulls deserve the benefit of the doubt, but if the support pivot at $340 gives way, then buyers should steer clear.

On the options trading front, Wednesday’s slide was insufficient to drive put popularity above calls. The total activity came in at 97% of the average daily volume, with 149,033 total contracts traded. Calls added 56% to the session’s take.

Implied volatility edged higher to 51%, placing it at the 51st percentile of its one-year range. With prices officially high, premiums are baking in daily moves of $11.30, or 3.2%.

Apple (AAPL)

Apple has been a mainstay atop the options leaderboard this week following its unveiling of four new services. The stock entered the week hot as a pistol and in need of a pullback. And pull back it did.

Thus far the profit-taking has been benign. Volume levels have been above-average, but nothing high enough to scare the children. The orderly selling has returned AAPL close to its rising 20-day moving average and creates a tasty looking buy-the-dip opportunity.

Its options trading was relatively subdued, but with the dull market backdrop, it was enough to make the leaderboard. Activity ticked higher to 106% of the average daily volume, with 574,890 total contracts traded. 55% of the total came from calls.

Implied volatility held steady at 27% and remained at the 35th percentile of its one-year range. The expected daily move is $3.17, or 1.7%.

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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