Tuesday’s Vital Data: Facebook, Tesla and Micron Technology

Options activity tells you what to expect in FB, TSLA and MU

U.S. stock futures are trading higher this morning, ending the standoff that has kept most broad market indexes locked in a narrow range for the past week. The gains come amid optimism that the Fed’s two-day meeting kicking off today will end with action supporting higher equity prices.

Against this backdrop, futures on the Dow Jones Industrial Average are up 0.53% and S&P 500 futures are higher by 0.59%. Nasdaq-100 futures have added 1.03%.

In the options pits, the summer doldrums took their toll yesterday with overall volume falling well below average levels. Specifically, only 14.3 million calls and 12.5 million puts changed hands on the session. The distance between put and call volume narrowed, however, when looking at the action at the CBOE. By day’s end, the single-session equity put/call volume ratio climbed to 0.72. Meanwhile, the 10-day moving average inched higher to 0.65.

Options traders swarmed in Facebook (NASDAQ:FB), Tesla (NASDAQ:TSLA) and Micron Technology (NASDAQ:MU).

Let’s take a closer look:

Tuesday's Vital Data: Facebook, Tesla and Micron Technology options trading

Facebook (FB)

Facebook shares were flying off the shelf yesterday after the social media king unveiled plans to launch a new cryptocurrency called Libra. FB stock ended the day up 4.24% and is set to open another 1.7% higher this morning.

With more than 2.4 billion active users, Facebook is in a unique position to bring the cryptic world of crypto to the mainstream. And the company isn’t venturing into the digital currency waters alone. They just announced a slew of large partners including Mastercard (NYSE:MA), Paypal (NASDAQ:PYPL) and Uber Technologies (NYSE:UBER) backing their efforts.

With the day’s gains, FB has returned to the north side of its 50-day and 20-day moving averages, officially recouping all of last month’s losses. It now sits within striking distance of its April high near $200.

On the options trading front, traders chased calls throughout the session. Total activity ramped to 259% of the average daily volume, with 649,521 contracts traded; 78% of the trading came from call options alone.

The increased demand drove implied volatility higher on the day to 32%, placing it at the 35th percentile of its one-year range. Premiums are now baking in daily moves of $3.82 or 2%.

Tesla (TSLA)

Tesla shares gained 4.7% on Monday to notch a new one-month high. And the rally is continuing this morning with TSLA stock up another 2.5% premarket. One notable development could be fueling the bulls’ fire.

Tesla’s CEO, Elon Musk, tweeted over the weekend, “Just deleted my Twitter account.” Shareholders the world over likely cheered the move given the trouble Musk’s aggressive tweets have caused in the past.

Although Tesla shares have rallied well off their 52-week lows, many resistance levels sit overhead, including the 50-day moving average. This has been the spot where previous rallies have failed, so it will be telling if TSLA can finally close and stay above it.

On the options trading front, puts outpaced calls despite the stock rally. Total activity climbed slightly higher to 109% of the average daily volume, with 427,700 contracts traded. Puts claimed 52% of the day’s take.

Implied volatility rose to 65%, which places it at the 29th percentile of its one-year range. Premiums are pricing in daily moves of $9.24 or 4.1%.

Micron (MU)

Micron shares have now come full circle this year. The four-month uptrend that carried the chip stock 41% higher from January through April has now completely unraveled. Its descending 20-day, 50-day and 200-day moving averages loom ominously overhead and reveal how bears dominate across all time frames.

With Monday’s drop, MU stock now sits at a critical short-term support level of $32. Speculators are likely teeing up breakdown trades in anticipation of the floor’s failure.

The company’s next earnings release is scheduled for June 25, so look for that to provide the next catalyst for Micron’s trend.

On the options trading front, calls were favored over two-to-one versus puts. Total activity finished just a hair above usual at 101% of the average daily volume, with 123,780 contracts traded. Calls accounted for 72% of the session’s sum.

Option premiums are pumped up ahead of next week’s earnings report. Implied volatility sits at 55% or the 56th percentile of its one-year range. Traders now expect daily moves of $1.11 or 3.4%.

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.


Article printed from InvestorPlace Media, https://investorplace.com/2019/06/tuesdays-vital-data-facebook-tesla-and-micron-technology/.

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