Friday’s Vital Data: Intel, Roku and Amazon

Options activity provides a look at expectations for INTC, ROKU and AMZN

U.S. stock futures are trading lower after President Trump made good on his threats to increase tariffs against China. The U.S. raised duties from 10% to 25% on $200 billion of Chinese goods.

Against this backdrop, futures on the Dow Jones Industrial Average are down 0.47%, and S&P 500 futures are lower by 0.59%. Nasdaq-100 futures have shed 0.64%.

In the options pits, call and put volumes exploded yesterday, signaling what may have been capitulation in the downswing. Specifically, about 21.3 million calls and 23.6 million puts changed hands on the session.

Meanwhile, over at the CBOE, the single-session equity put/call volume ratio zipped to a six-week high of 0.70. The 10-day moving average followed suit popping to 0.64, which is a two-month high.

Options traders thronged in Intel (NASDAQ:INTC), Roku (NASDAQ:ROKU) and Amazon (NASDAQ:AMZN).

Let’s take a closer look:

Friday's Vital Data: Intel, Roku and Amazon

Roku (ROKU)

Roku was the talk of the town Thursday after a smashing earnings release pole vaulted the stock 28% higher to a new record. For the first quarter, the streaming-TV company scored revenue of $206.7 million, which sailed past analyst estimates calling for $192 million.

On the earnings side, the company lost 9 cents per share, which came in far less than expectations for a 24 cent loss.

ROKU stock ended the day with one of the largest green candlesticks you’ll ever see. The volume accompanying the rally was also record-shattering with 56.7 million shares traded. This is a new high-water market for participation during a single session.

The price trend now carries strong momentum, but bulls will find it challenging to identify a low-risk entry point. A pullback or consolidation will help in creating a new buy setup.

As far as options trading goes, calls won the day, if slightly. Activity ballooned to 493% of the average daily volume, with 280,943 total contracts traded. Calls claimed 53% of the day’s take.

Traders crushed implied volatility down to 63%, which places it at the 34th percentile of its one-year range. Premiums are baking in daily moves of $3.28 or 3.9%.

Intel (INTC)

Dour remarks from Intel during an investor event sent its shares skidding 2.62% on heavy volume. The company issued a three-year outlook that revealed tepid revenue and earnings growth as well as shrinking gross margins. Thursday’s losses compound the recent pain inflicted after the stock slumped after its disappointing April earnings announcement.

INTC stock has officially unwound all of its 2019 gains and now sits negative year-to-date. It has submerged beneath the 20-day, 50-day and 200-day moving averages reflecting mass weakness across all time frames. Major support looms at $43 so consider that the next downside target.

On the options trading front, traders paraded into puts on the session. Activity swelled to 254% of the average daily volume, with 310,192 total contracts traded. Puts accounted for 55% of the sum.

The increased uncertainty drove implied volatility to 33% placing it at the 50th percentile of its one-year range. Flush premiums are now baking in daily moves of 96 cents or 2.1%.

Amazon (AMZN)

The mid-day market recovery buoyed Amazon shares into the close. With the rebound, the e-commerce king was able to hold short-term support and keep its uptrend intact. That said, its uptrend is slowing in momentum so some additional time may be needed before it can recapture the bullishness that propelled AMZN through March and April.

The key level to watch is $1,875. As long as we remain above it, buyers hold the upper hand.

On the options trading front, calls outpaced puts by a modest margin. Total activity ticked higher to 117% of the average daily volume, with 201,597 contracts traded. Calls were 58% of the amount.

Implied volatility crawled higher to 29%, placing it at the 35th percentile of its one-year range. Premiums are baking in daily moves of $34.43 or 1.8%.

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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