Thursday’s Vital Data: Walmart, Beyond Meat and Aurora Cannabis

Options activity provides a look at expectations on BYND, WMT and ACB stock

U.S. stock futures are trading slightly higher this morning in an attempt to rally for the third day in a row. The calm open comes as a refreshing break from the recent streak of large overnight down gaps.

Heading into the open, futures on the Dow Jones Industrial Average are up 0.32%, and S&P 500 futures are higher by 0.26%. Nasdaq-100 futures have added 0.02%.

In the options pits, call volume won the day, outpacing puts by half a million contracts. Specifically, about 17.319.1 million calls and 16.7 million puts changed hands on the session.

Interestingly, the demand for puts still held firm over at the CBOE, causing the single-session equity put/call volume ratio to rise and jump back up to 0.77. That places it very close to its 2019 high and suggests fear is still in the air. Meanwhile, the 10-day moving average continued its climb with a ramp to 0.69.

Let’s take a closer look:

Thursday's Vital Data: Walmart, Beyond Meat and Aurora Cannabis, options trading

Beyond Meat (BYND)

The post-IPO surge in Beyond Meat reached a fever pitch Wednesday after the restaurant chain Tim Hortons announced it would begin offering the company’s food on its menu. BYND closed up 9.1% on the second-highest volume day of its life.

Since opening at $45 during its public debut on May 2, BYND stock has grown 93%. The lack of sufficient price action leaves little to analyze, but there’s no doubt its growing trend is bullish.

With options now available on the stock, we have another angle to monitor. Calls were the hot ticket yesterday, accounting for 61% of the overall trading. Total activity ballooned to 464% of the average daily volume, with 98,769 contracts traded.

Walmart (WMT)

Walmart earnings had options traders swarming Wednesday. Last night’s release revealed the global retail juggernaut scored mixed results for its first quarter. Revenue missed expectations of $124.94 billion, instead arriving at $123.9 billion. But earnings still came in above forecasts: $1.13 versus $1.02.

WMT stock is currently trading up 3% premarket.

This morning’s jump is a welcome development for Walmart’s price chart, which has been sluggish for months. Its 50-day moving average is relatively flat, revealing the intermediate trend has lost its rudder. If today’s spark can lift WMT above the $104 resistance level, then watch out above.

On the options trading front, traders gobbled up calls ahead of the number. Activity swelled to three and a half times the average daily volume, with 125,442 total contracts traded. Calls claimed 60% of the take.

Based on implied volatility, premiums were pricing in an earnings move of $3.33 or 3.33%, so that makes this morning’s 3% jump right in-line with expectations. Chalk this up as a win for the clairvoyance of Mr. Market.

Aurora Cannabis (ACB)

Aurora Cannabis gave investors a peek behind the curtain this week, revealing their earnings and sales data for the quarter. The highlight of the announcement was its rapid year-over-year revenue growth of 367% to C$75 million. Analysts were forecasting sales of C$67.5 million. Unfortunately, the top line beat didn’t translate to strong bottom line metrics. ACB lost 16 cents per share far outpacing calls for a 5 cent loss.

Optimistic traders decided to focus on the large sales beat, sending the stock up 3.6% by day’s end. ACB stock remains stuck in a range and is below its 20-day and 50-day moving average. It needs to take out $9.25 before re-establishing an uptrend. Until then, I suggest steering clear.

On the options trading front, speculators focused on calls for the session. Activity grew to 232% of the average daily volume, with 102,730 total contracts traded. Calls accounted for 67% of the sum.

The post-earnings volatility crush was on full display driving implied volatility into the basement at 67%. It now sits at its lowest levels of the past year suggesting option premiums are officially cheap.

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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