U.S. stock futures are trading lower this morning as elevated volatility continues to hound equities. The down open is dashing hopes that Monday’s tariff-inspired plunge was a one-off. Volatility looks to remain for a spell.
Ahead of the bell, futures on the Dow Jones Industrial Average are down 0.63%, and S&P 500 futures are lower by 0.65%. Nasdaq-100 futures have lost 0.78%.
In the options pits, put volume made a comeback, almost dethroning calls as the victor for the day. Overall volume levels hung around average readings. Specifically, roughly 17.7 million calls and 17.2 million puts changed hands on the session.
The put surge was enough to send the CBOE single-session equity put/call volume ratio screaming back to 0.63, which lands it back inside its normal range. Meanwhile, the 10-day moving average held its ground at 0.60.
Options volumes fell well below Friday’s high water mark. The following were three of the most popular stocks: Occidental Petroleum (NYSE:OXY), Apple (NASDAQ:AAPL) and Alibaba (NYSE:BABA).
Let’s take a closer look:
Occidental Petroleum (OXY)
Occidental Petroleum made a rare appearance on top of the most-active options board. The excitement was likely a result of two news events of note. First-quarter earnings topped the Street’s expectations and signaled substantial growth compared to the same quarter last year. Second, OXY submitted a takeover bid for Anadarko Petroleum (NYSE:APC) that places it ahead of Chevron (NYSE:CVX), which had previously offered a buyout deal.
For the session, OXY stock rallied 1.4% on heavy volume. The technical posture looks like garbage with the company’s shares submerged beneath falling moving averages. However, buyers did step up to defend a critical support area at $57. As long as the floor holds, you can keep your bounce hopes alive.
On the options trading front, puts proved more popular than calls despite the rally. Activity swelled to 262% of the average daily volume, with 116,381 total contracts traded. Puts accounted for 58% of the tally.
With the bidding war still in full swing, implied volatility remains lofty at 35%. That places it at the 57th percentile of its one-year range. Premiums are pricing in daily moves of $1.30 or 2.2%.
Apple (AAPL)
Yesterday’s rapid rebound after an ugly open impressed spectators. As soon as the morning bell rang, AAPL stock shot higher and continued to climb throughout the day. Buyers’ defense of the rising 20-day moving average helps reaffirm the uptrend’s dominance.
As long as Monday’s low of $203.50 holds, it’s game on for bulls.
Options trading volumes weren’t all that high, but AAPL was still able to clinch the tenth and final spot atop Monday’s leaderboard. Calls outpaced puts by a slim margin, helping to drive total activity to 87% of the average daily volume, with 466,826 contracts traded. Calls claimed 56% of the sum.
The increased demand pushed implied volatility up to 23%, placing it at the 25th percentile of its one-year range. Premiums are baking in daily moves of $3.02 or 1.4%.
Alibaba (BABA)
Chinese stocks bore the brunt of yesterday’s damage, but their recovery from the open was impressive. The weak open was particularly annoying for BABA stock because it reversed what was otherwise a healthy breakout last week. Fortunately, the intraday rebound kept its overall uptrend intact and pushed prices back above the 50-day and 20-day moving averages.
With earnings looming so close on May 15, however, it’s probably worth avoiding BABA trades until the uncertainty has passed.
The action on the options trading front should encourage bulls. Calls ran the tables, claiming 72% of the total trading. Activity grew to 194% of the average daily volume, with 284,410 contracts traded.
Implied volatility surged on the session to 38%, placing it at the 35th percentile of its one-year range. Premiums are pricing in daily moves of $4.46 or 2.4%.
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.
