Thursday’s Vital Data: Salesforce, Cronos Group and Uber

Options activity provides a look at expectations on UBER, CRON and CRM

U.S. stock futures are trading slightly higher this morning.

Ahead of the bell, futures on the Dow Jones Industrial Average are up 0.11%, and S&P 500 futures are higher by 0.11%. Nasdaq-100 futures have added 0.04%.

In the options pits, calls once again ruled the roost even as overall volume fell back toward average levels. Specifically, about 19.2 million calls and 17.6 million puts changed hands on the session.

The action at the CBOE was similar with calls leading the charge. The single-session equity put/call volume ratio fell to 0.64 — a one-week low. Meanwhile, the 10-day moving average held firm at 0.70.

Call buyers ran the tables in individual stocks. Salesforce (NYSE:CRM) topped earnings estimates for the first-quarter sending its share price up 5%. Cronos Group (NASDAQ:CRON) benefited from a Bank of America (NYSE:BAC) analyst upgrade from underperform to buy. Uber (NYSE:UBER) rose to a new record high, finally departing its post-IPO range.

Let’s take a closer look:

Thursday's Vital Data: Salesforce, Cronos Group and Uber

Salesforce (CRM)

Salesforce shares were flying high following Tuesday night’s earnings report. For the first quarter, CRM adjusted earnings-per-share of 93 cents on revenue of $3.74 billion. Both measures smashed analysts’ estimates. CRM stock rallied 5%, reclaiming in a single session, all the ground it lost over the past month.

The jump boosted other marquee software stocks that had recently fallen prey to the selling pressure in the Nasdaq.

CRM now sits back above its 50-day and 20-day moving averages. It’s a bullish signal, to be sure, but the stock still sits in the middle of its five-month trading range. It will take a breakout above $167 resistance to kick-off the next up-leg.

On the options trading front, traders favored calls over puts. Activity swelled to 264% of the average daily volume, with 111,495 total contracts traded. Calls accounted for 58% of the day’s take.

The expected move ahead of earnings was $7.75 or 5%, which means Wednesday’s gap was in-line with forecasts. The post-earnings volatility crush was on full display driving the reading to 32% or the 28th percentile of its one-year range. Premiums are now pricing in daily moves of $3.18 or 2%.

Cronos Group (CRON)

Cronos shares rocketed as much as 15.8% higher on Wednesday before falling back to a 10.9% gain on the session. The catalyst for the sudden surge was an upgrade by Christopher Carey, an analyst for Bank of America. Citing the Canadian company’s plans for its entrance into the U.S. market, Mr. Carey ratcheted his rating from underperform to buy. Alongside the upgrade, he raised his price target from $13 to $20.

The timing of the upgrade couldn’t have been better. CRON stock has been stuck in a downtrend ever since March, losing almost half of its value. It was also testing the oft-watched 200-day moving average and in need of something positive to bring buyers out of the woodwork.

With the jump, the technical picture has improved, but the downtrend has yet to reverse fully. For that, we need a close above the 50-day moving average and horizontal resistance at $16.50.

On the options trading front, traders gobbled up calls all day long. Total activity grew to 388% of the average daily volume, with 91,214 contracts traded; 69% of the trading came from call options alone.

The increased demand drove implied volatility slightly higher on the day to 70% placing it at the 10th percentile of its one-year range. Premiums are baking in daily moves of 71 cents or 4.4%.

Uber (UBER)

While UBER stock is still in its infancy as a publicly traded vehicle, it seems to have finally found its footing. For proof, I point you toward yesterday’s trading session, which saw the ride-hailing kingpin eclipse the high of its IPO day. Indeed, Wednesday’s close of $45 marks a new record close and suggests UBER was able to absorb any selling pressure coming into the market after its IPO.

With only one month of data to chew on, chart watchers still have few inputs for their analysis. Nonetheless, the trend, short as it is, points higher. Near-term support sits at $39 so as long as we remain above it the path of least resistance is north.

On the options trading front, traders stampeded into call options. Total activity climbed to 229% of the average daily volume, with 135,979 contracts traded; 76% of the trading came from call options alone.

Implied volatility ticked higher to 47%, but remains at the lower end of its range.

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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