U.S. stock futures are trading lower as traders return from the Easter holiday weekend.
Ahead of the bell, futures on the Dow Jones Industrial Average are down 0.39%, and S&P 500 futures are lower by 0.40%. Nasdaq-100 futures have shed 0.57%.
In the options pits on Thursday, call volume led the charge, and overall volume levels ended slightly above average. Specifically, about 20.5 million calls and 17.9 million puts changed hands on the session.
However, those calls didn’t translate over to the CBOE, where the single-session equity put/call volume ratio ramped to 0.62 — a one-week high. Meanwhile, the 10-day moving average held steady at 0.60.
Here are three popular stocks landing atop the most-active options list: Pfizer (NYSE:PFE), Canopy Growth Corp (NYSE:CGC) and Microsoft (NASDAQ:MSFT).
Let’s take a closer look:
Pfizer (PFE)
Weakness in the healthcare sector spilled into biopharma. Pfizer fell 6.4% over the final three trading sessions of the week to close at a new nine-month low. The groundswell in volume during Friday’s swoon revealed panic was in the air and could help to spell a short-term low in the now deeply oversold stock.
But with PFE submerged deeply beneath all major moving averages, expect any relief rally to be short-lived.
The next earnings release is slated for April 30.
On the options trading front, puts ruled the roost. Activity jumped to 417% of the average daily volume, with 129,626 total contracts traded. Puts edged out calls to claim 53% of the day’s take.
The increased demand drove implied volatility higher on the day to 26%, placing it at the 60th percentile of its one-year range. Premiums are officially juiced and no price in daily moves of 65 cents or 1.7%.
Canopy Growth Corp (CGC)
Canopy Growth Corp shares saw heightened volatility on Thursday after the company reported a deal giving it the right to buy Acreage Holdings (OTCMKTS:ACRGF). Acreage Holdings operates in the U.S., and its purchase will allow CGC to expand into the country if the federal government ever decides to legalize cannabis.
The initial surge on the news carried CGC stock up as much as 11.4%. However, by day’s end, profit-taking pared the gain to 3.9%. For the past two months, Canopy Growth Corp shares have been locked in a trading range. Thursday’s jump had the potential to finally break the stock out, but the substantial amount of selling that came in near resistance rejected the attempt. Until we see a proper breach of the ceiling at $47.50, CGC remains a tricky trade.
On the options trading front, traders gobbled up call options. Total activity grew to 315% of the average daily volume, with 133,768 contracts traded; 71% of the trading came from call options alone.
Implied volatility popped on the day to 56%, but remains near the lower end of its one-year range.
Microsoft (MSFT)
The technology sector has been a standout in recent months, and Microsoft is arguably the poster child for its strength. MSFT stock surged to a new record high on Thursday, bringing its year-to-date gains to 21.6%. The profits come as investors gear up for the software sultans next earnings release on April 24.
The catalyst for Thursday’s euphoria was Microsoft announcing its purchase of Express Logic.
On the options trading front, calls outpaced puts by a wide margin. Activity climbed to 224% of the average daily volume, with 285,449 total contracts traded; 67% of the trading came from call options alone.
Implied volatility remains at the low end of its range, which suggests investors have little fear heading into earnings. At 24%, implied volatility sits at the 20th percentile of its one-year range. Premiums are baking in daily moves of $1.85 or 1.5%.
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.
