Wednesday’s Vital Data: Starbucks, Boeing and Microsoft

Options activity provides a look at expectations for BA, MSFT and SBUX stock

U.S. stock futures are extending their losses premarket as China trade worries continue to vex traders.

In early morning trading, futures on the Dow Jones Industrial Average are down 0.25% and S&P 500 futures are lower by 0.35%. Nasdaq-100 futures have shed 0.56%.

In the options pits, panic was in the air, driving put volumes to the moon. This pushed overall volumes well above average levels. Specifically, about 21.6 million calls and 23.9 million puts changed hands on the session.

The demand surge was felt at the CBOE as well, with the single-session equity put/call volume ratio ramping to a new one-month high at 0.68. Meanwhile, the 10-day moving average popped to 0.61.

Options traders were particularly excited about Starbucks (NASDAQ:SBUX), Boeing (NYSE:BA) and Microsoft (NASDAQ:MSFT).

Let’s take a closer look:

Wednesday's Vital Data: Starbucks, Boeing and Microsoft

Starbucks (SBUX)

Starbucks remained above the fray Tuesday, notching a new record high while the rest of the market plumbed the depths. Although SBUX pared its gains by day’s end, it closed well above its rising 20-day moving average reflecting continued dominance by buyers. The relative strength is impressive and suggests there is little reason to bet against the trend for now.

The catalyst that propelled SBUX to the top of the most-active options board is its looming dividend date. Starbucks trades ex-dividend on May 8, effectively pricing out its next quarterly payment of 36 cents. Traders seeking short-term control of the shares to have rights to the dividend pushed call volumes sharply higher on the day.

Total activity swelled to 439% of the average daily volume, with 155,539 contracts traded; 84% of the trading came from call options alone.

The demand surge buoyed implied volatility to 22%, placing it at the 39th percentile of its one-year range. Premiums are now pricing in daily moves of $1.06 or 1.4%.

Boeing (BA)

Boeing shares finally breached the lower end of their trading range Tuesday. The breakdown dashes hope for a quicker recovery to the early-March plunge due to the Lion Air crash of its 737 Max aircraft.

The technical posture for the stock now looks precarious. The 50-day and 20-day moving averages are rolling over, and there isn’t much support until the low $300s.

On the options trading front, calls outpaced puts on the session which is surprising given the nasty plunge. Activity climbed to 152% of the average daily volume, with 186,618 total contracts traded. Calls claimed 54% of the day’s take.

Implied volatility jumped to 31%, which places it at the 39th percentile of its one-year range. The daily expected move is now $7.07 or 2%.

Microsoft (MSFT)

The chart story of the day for Microsoft was a gap fill. The window opened by last month’s rousing earnings announcement was finally closed during yesterday’s selloff. Fortunately, buyers emerged to provide support, and MSFT bounced back nicely by day’s end.

MSFT stock’s pullback is one of the best ones in the market right now. While many stock trends are showing slowing momentum and breaching support, MSFT is simply flashing a garden variety retracement pattern. If you’re in a mood for shopping the stock dip, then Microsoft should be one of the top candidates.

On the options trading front, calls proved more popular than puts. Total activity added up to 150% of the average daily volume, with 262,404 contracts traded. Calls accounted for 57% of the tally.

The theme of the day for implied volatility was rallying, and MSFT was no exception. Its volume bumped up to 26% or the 27th percentile of its one-year range. Premiums are now baking in daily moves of $2.07 or 1.6%.

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.


Article printed from InvestorPlace Media, https://investorplace.com/2019/05/wednesdays-vital-data-starbucks-boeing-and-microsoft/.

©2019 InvestorPlace Media, LLC