Friday’s Vital Data: IBM, Microsoft and Barrick Gold

U.S. stock futures are trading higher this morning in a continuation of yesterday’s rally. After a two-day slide, the recent rebound is reassuring traders that bulls are still in control of the overall trend.

Friday's Vital Data: IBM, Microsoft and Barrick Gold

Source: Shutterstock

As we head into the first minutes after the bell, the Dow Jones Industrial Average is up 0.36%, and S&P 500 is higher by 0.36%, while the Nasdaq-100 has added 0.45%.

Yesterday’s action in the options pits saw a surge in overall trading volumes. Calls ran hot throughout the session, eclipsing the 20 million mark for the first time in a while. By the closing bell, about 21 million calls and 17.4 million puts changed hands.

The call surge was enough to knock the CBOE single-session equity put/call volume ratio back down from the one-month high tagged on Wednesday. The metric closed at 0.60, landing it right on top of the 10-day moving average.

On Thursday, options traders zeroed in on earnings announcements and gold stocks. International Business Machines Corp. (NYSE:IBM) and Microsoft Corporation (NASDAQ:MSFT) saw heavy traffic surrounding their quarterly reports. Elsewhere, Barrick Gold (NYSE:GOLD) shares were bid to the moon amid the ongoing gold rush.

Let’s take a closer look:


IBM reported earnings Wednesday night, and the Street cheered the results, gifting its share price with a 4.6% gain. The rally pushed IBM stock to a fresh nine-month high and placed it on firm footing to make a run toward $160. Ahead of the report, the tech titan had already made progress on its price trend. With it now trending above all major moving averages, the path of least resistance is higher.

Digging into the numbers reveals a slight decrease in revenue compared to the year-ago quarter. IBM was able to clinch a 3% rise in adjusted earnings, however. Adjusted earnings was $3.17 per share on revenue of $19.16 billion. According to FactSet, analysts were calling for earnings of $3.08 on $19.17 billion in revenue.

On the options trading front, traders gobbled up calls throughout the day. Total activity ballooned to 685% of the average daily volume, with 173,767 contracts traded. 65% of the trading came from call options alone.

With the uncertainty of earnings in the rearview mirror, implied volatility sunk back to more normal levels. At 24%, the reading now sits at the 45th percentile of its one-year range. Premiums are baking in daily moves of $2.27 or 1.5%.

Microsoft (MSFT)

Microsoft is one of this year’s biggest winners among the large-cap tech space, and the gains are set to continue after last night’s robust report.

For the fiscal fourth quarter, MSFT raked in earnings of $1.37 per share on revenue of $33.72 billion. The Street was calling for $1.21 per share on $32.77 billion, so consider this a strong beat on both fronts.

MSFT stock is poised to open up around 3% this morning, pushing the company well north of the $1 trillion market cap. Its year-to-date gains have now climbed to 38%.

On the options trading front, traders favored calls ahead of the number. Activity swelled to 315% of the average daily volume, with 500,809 total contracts traded. Calls claimed 55% of the session’s sum.

The expected move heading into earnings was $3.95, so this morning’s gap is right in line with forecasts. Three cheers for market efficiency!

Barrick Gold (GOLD)

Gold and silver prices are going bananas. They are this summer’s must-have asset, and gold mining stocks are riding the coattails of the popularity. Yesterday’s breakout in Barrick Gold sent the miner to a new 52-week high amid heavy volume.

And speaking of volume, the past six weeks’ ascension has seen accumulation days galore signaling a mass influx of institutions into the space. The gains have been sufficient to pull the 200-day moving average higher, which is saying something because it’s been stuck in the mud for over a year.

On the options trading front, traders came after calls with a vengeance. Activity ramped to 282% of the average daily volume, with 109,783 total contracts traded. Calls contributed 83% to the day’s take.

The increased demand drove implied volatility higher to 37% or the 48th percentile of its one-year range. Premiums are pricing in daily moves of 40 cents or 2.3%

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,

©2022 InvestorPlace Media, LLC