Friday’s Vital Data: Nike, Boeing and iQiyi

Options activity provides a look at expectations for NKE, BA and IQ stock

U.S. stock futures are trading higher this morning to extend yesterday’s rally.

Heading into the open, futures on the Dow Jones Industrial Average are up 0.06%, and S&P 500 futures are higher by 0.11%. Nasdaq-100 futures have added 0.31%.

In the options pits, put trading sank like a stone yesterday reflecting a quick departure of fear in the market. Total volume ended well below average with around 16 million calls and 11.8 million puts changing hands on the session. The sharp drop in put demand drove the CBOE single-session equity put/call volume ratio down to 0.58. At the same time, the 10-day moving average dropped to a fresh two-month low at 0.60.

Options trading was hopping in these the following stocks. Nike (NYSE:NKE) saw renewed options interest ahead of last night’s earnings announcement. Boeing (NYSE:BA) shares fell almost 3% after U.S. authorities uncovered another issue with the company’s 737 MAX jet. Finally, Iqiyi Inc (NASDAQ:IQ) was flooded with call demand after the Beijing-based internet company scored an award at an industry event in China.

Let’s take a closer look:

Friday's Vital Data: Nike, Boeing and iQiyi, options trading

Nike (NKE)

Last night’s earnings announcement from Nike was much ado about nothing. At least, that’s the message from the stock’s reaction. After a quick bout of volatility following the release, NKE stock is set to open unchanged this morning. For the quarter, Nike earned 62 cents a share on revenue of $10.18 billion. Analysts were calling for earnings of 66 cents a share on $10.16 in revenue.

Nike’s price chart has traveled a circuitous route to nowhere for the past five months. The long-term trend continues to point higher, but the short- and intermediate-term trends have downshifted to neutral. Until NKE can finally depart from the sloppy trading range, trend traders will likely find better trades elsewhere.

The snoozer of a reaction should bring big profits to option sellers at the open. Premiums were anticipating a move of $3.95 or 4.7%, so options prices should rapidly recede right out of the gate. Ahead of the release, puts outpaced calls by a slim margin. Total activity soared to 689% of the average daily volume, with 127,382 contracts traded.

Boeing (BA)

Just when you thought it was safe to wade back into the waters, another negative news headline drops for Boeing. Shares of the aerospace juggernaut opened 2% lower Thursday after the Federal Aviation Administration discovered a new flaw in the company’s 737 MAX jet. The company will have to solve the issue before its grounded airplanes can return to service.

You can find more details on the story here.

The timing of the find couldn’t have been worse for traders. With this month’s upside breakout, BA stock was looking its healthiest since February. The recent high base was on the cusp of breaking out just yesterday and likely sucked in a ton of bulls that are now trapped with Thursday’s down gap. The whole fakeout has cast a pall over the stock and suggests would-be buyers should steer clear for now.

On the options trading front, we saw a mad dash for put protection throughout the day. Total activity jumped to 228% of the average daily volume with 154,783 contracts traded. Puts accounted for 57% of the session’s sum.

The increased demand drove implied volatility up to 29%, which places it at the 31st percentile of its one-year range. Premiums are baking in daily moves of $6.70 or 1.8%.

iQiyi (IQ)

IQiyi shares rocketed 10% higher after the online video platform provider won the “Mobile Internet Innovation Pioneer Award” at the Mobile World Congress event in Shanghai, China. For the full rundown, see here.

The rally breathed new life into the sagging stock, pushing it to a fresh six-week high. Most importantly, it halted IQ stock’s downtrend and breached multiple resistance zones, including the oft-watched 50-day moving average. Bullish trades are finally back on the menu.

On the options trading front, traders went cuckoo for call options. Activity swelled to 629% of the average daily volume, with 107,013 total contracts traded; 78% of the trading came from call options alone.

Implied volatility jumped to 56% pushing it to the 16th percentile of its one-year range. Premiums are now pricing in daily moves of 71 cents or 3.5%.

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,

©2019 InvestorPlace Media, LLC