U.S. stock futures are circling unchanged this morning after finishing a volatile Thursday session. Earnings continue to dominate the market narrative with heavy hitters now stepping up to the plate daily.
Heading into the open, futures on the Dow Jones Industrial Average are down 0.03% and S&P 500 futures are higher by 0.08%. Nasdaq-100 futures have added 0.39%.
In the options pits, Thursday’s dramatic rebound from the morning selloff finally gave us something to talk about. Call volume jumped on the day as traders took to the derivatives mart to express their optimism. Specifically, about 20 million calls and 15.5 million puts changed hands on the session.
The uptick in call demand was enough to move the needle at the CBOE finally. The single-session equity put/call volume ratio slipped to a one-week low at 0.57. Meanwhile, the 10-day moving average fell to 0.59.
Options traders focused on earnings and Mickey Mouse on Thursday. Amazon (NASDAQ:AMZN) and Intel (NASDAQ:INTC) were both in the crosshairs ahead of last night’s reports. And the magical rise in Disney (NYSE:DIS) went into overdrive.
Let’s take a closer look:
Amazon (AMZN)
Amazon took the center stage last night in hopes of continuing the glorious rally in the tech sector. While the numbers had some fireworks, investors responded by not responding. They took a nap instead, and AMZN stock is trading up a mere 1.20% after hours.
On a bright note, the absence of an earnings oopsie and large down-gap should mean the meteoric rise in the Nasdaq lives to fight another day.
For the first quarter, AMZN earned $7.09 per share on revenue of $59.7 billion. Both metrics topped estimates of $4.70 and $59.68 billion.
On the options trading front, calls outpaced puts ahead of the report. Activity ticked higher to 145% of the average daily volume, with 209,398 contracts traded. Calls accounted for 60% of the total.
Volatility sellers will awake to a massive windfall. Premiums were pricing in a $60 move on earnings, so the $22 jump is a real snoozer by comparison. Expect a steep volatility crush in implied volatility this morning.
Intel (INTC)
Intel was the other technology giant reporting earnings last night. But, unlike Amazon, INTC stock is a heaping mess after hours.
Although the chipmaker bested forecasts for the first quarter, it’s downbeat forward guidance had investors leaning on the sell button. The company expects full-year earnings of $4.35 per share on $69 billion in revenue. Analysts have been expecting $4.50 on $71.04 billion.
INTC stock is down 7.75% in premarket trading. The entire semiconductor space has been hot as a pistol this year, so some backing and filling in the wake of Intel’s report will help to establish a more sustainable trend.
As far as the options action ahead of earnings, calls outpaced puts by a large margin. Activity grew to 300% of the average daily volume, with 222,494 total contracts traded; 69% of the trading came from call options alone.
Disney (DIS)
The rocket ship ride to the moon continued in Disney Thursday. The mouse house added another 2% to its share price bringing the total increase since its Disney + unveiling earlier this month to 15%.
And if that wasn’t enough, DIS stock is up 1% premarket.
The price action has been extremely bullish all month long. It’s overbought, yes, but as long as momentum calls the shots, it’s a race to the moon. This month’s breakout ended a four-year trading range, so that’s a lot of pent-up energy finally being released.
On the options trading front, traders went absolutely gaga for call options. Activity swelled to 204% of the average daily volume, with 352,229 total contracts traded; 83% of the trading came from call options alone.
The increased demand drove implied volatility up to 25% placing it at the 41st percentile of its one-year range. Options are now pricing in daily moves of $2.15 or 1.6%.
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.
