Monday’s Vital Data: Lyft, Roku and Amazon

Options activity provides a look at expectations on LYFT, ROKU and AMZN stock

U.S. stock futures are trading down hard amid continued trade war concerns. The weak open comes after buyers mounted a strong comeback on Friday and unfortunately suggests that whipsaw and elevated volatility is here to stay for a spell.

Ahead of the bell, futures on the Dow Jones Industrial Average are down 1.92%, and S&P 500 futures are lower by 1.97%. Nasdaq-100 futures have shed 2.58%.

In the options pits, put volume surged passed calls helping to push overall volume levels well above average. Specifically, about 20.8 million calls and 22.1 million puts changed hands on the session.

The dash for puts made waves at the CBOE as well with the single-session equity put/call volume ratio rocketing to 0.80 — a new 2019 high. The 10-day moving average also jumped to a new high for the year at 0.65.

Today we’ll look at three big hitters landing atop the options trading leaderboard: Lyft (NASDAQ:LYFT), Roku (NASDAQ:ROKU) and Amazon (NASDAQ:AMZN).

Let’s take a closer look:

options trading Monday's Vital Data: Lyft, Roku, and Amazon

Lyft (LYFT)

Lyft shares skidded to a new all-time low Friday at $50.02 after plunging 9.4%. The losses came alongside a poorly received IPO for Uber (NYSE:UBER), which saw the transportation titan fall 1% in a volatile session.

The technical picture for LYFT stock has been ugly ever since its late-March IPO. We’ve seen one small bottoming attempt that was dashed by disappointing earnings. Short of that, LYFT’s trajectory has been virtually straight down making it a widowmaker for anyone trying to make money on the long side. Until we see a bona fide break of resistance and the emergence of an uptrend, I suggest steering clear of any bullish plays.

On the options trading front, Uber stock’s IPO lit a fire under LYFT options. Puts only slightly outpaced calls on the session taking 51% of the total. Activity swelled to 298% of the average daily volume, with 238,202 contracts traded.

Implied volatility rallied on the day to 66%.

Roku (ROKU)

The rousing rally in Roku continued on Friday but ultimately fizzled by the end of the day amid well-deserved profit taking. ROKU stock ended down 0.50%. Thursday’s post-earnings pole vault thrust ROKU back on the radar of momentum traders everywhere and it’s likely to remain a favorite for weeks to come.

What’s particularly impressive about last week’s performance in Roku is that it took place during a time when the rest of the market was terrified by tariffs. The relative strength makes ROKU one of the best stocks to buy into weakness.

On the options trading front, calls proved more popular than puts. Activity climbed to 269% of the average daily volume, with 175,526 total contracts traded. Calls accounted for 55% of the tally.

Implied volatility dropped dramatically after earnings last week and now sits at 58% or the 26th percentile of its one-year range. Premiums are pricing in daily moves of $3.01 or 3.6%.

Amazon (AMZN)

Amazon notched its fifth straight down a day ahead of the weekend, closing beneath its 20-day moving average for the first time since March 8. For all its fury, the drop has been quite tame. From peak to trough, AMZN stock is only down 3.8%.

That said, we did see slowing momentum before the retreat, so the overall uptrend may be shifting to more of a neutral posture until the latest flare-up in the trade war passes. Given the strength of Amazon’s intermediate and long-term trends, I suspect any further weakness will prove temporary.

On the options trading front, traders gobbled up calls Friday. Activity jumped to 193% of the average daily volume, with 338,244 total contracts traded; 57% of the trading came from call options alone.

Implied volatility slipped to 27% placing it at the 31st percentile of its one-year range. Premiums are baking in daily moves of $31.93 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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