U.S. stock futures are crawling lower this morning amid mild profit–taking after last week’s jump to new record highs.
Heading into the open, futures on the Dow Jones Industrial Average are down 0.32% and S&P 500 futures are lower by 0.26%. Nasdaq-100 futures have lost 0.39%.
In the options pits, the post-holiday session saw below-average volume with only 15.7 million calls and 12.7 million puts changing hands. The action at the CBOE also reflected a lack of put demand with the single-session equity put/call volume ratio sliding to 0.61. With the reading now sitting in the dead center of its summer range, it’s also right on top of the 10-day moving average.
Let’s take a closer look:
A lackluster response to Friday’s better-than-expected jobs report held the broader market under water, but Roku cared little for such shenanigans. The streaming media device company shot 5% higher on strong volume to kick-off its next upswing.
The timing of ROKU stock’s recent strength couldn’t have come at a better time. The red-hot momentum stock had recently cooled amid valuation concerns and profit-taking following its meteoric 2019 rise.
At last month’s peak, ROKU had risen 253% for the year. By comparison, its 19% pullback is barely noticeable. The timing of the bounce coincided with a test of the rising 50-day moving average and reaffirmed the bulls’ control of the intermediate-term trend.
On the options trading front, traders favored calls on the session. Total activity grew to 178% of the average daily volume, with 130,407 contracts traded. Calls claimed 56% of the day’s take.
The ongoing ramp in implied volatility continued, rising to 73% or the 46th percentile of its one-year range. Premiums are pricing in daily moves of $4.50 or 4.6%.
Electronic Arts (EA)
Just when it looked like Electronic Arts shares had finally turned the corner, sellers staged a nasty rug-pull. The once high-flying video game company saw its breakout attempt fail miserably with a two-day 10% whack ahead of the weekend.
The slide coincides with the release of season 2 of Apex Legends, the company’s popular battle royale game, which appears to be tracking well behind the mass adoption of its first season.
Ever since last year’s 50% beatdown, EA stock has been floundering, unable to find any upside momentum. Last week’s rejected breakout attempt underscores the ongoing challenge for traders trying to play EA to the long side. Critical support looms at $90. If it breaches that, watch out below.
As far as options trading goes, EA topped the most-actives list with total activity rising to 346% of the average daily volume. By the closing bell, 75,626 contracts traded with calls accounting for 55% of the session’s sum.
Implied volatility drifted sideways to remain at 41%. That also lands it at the 40th percentile of its one-year range. The expected daily move is $2.41 or 2.6%.
Snap shares completed a textbook high base pattern Friday with a breakout to fresh 52-week highs. With the jump to $15.23, SNAP stock is officially up 176% on the year making it one of the Street’s hottest stocks. It’s certainly a favorite among traders shopping the few low-priced stocks that exist after a ten-year bull market.
The combination of price and volume has been extremely bullish for the past six weeks. SNAP stock has remained on the north side of a rising 20-day moving average. Accumulation days litter the landscape with nary a whiff of distribution — no need to overthink this one. The path of least resistance is higher.
On the options trading front, traders came after calls like patriots to a fireworks show. Activity rose to 145% of the average daily volume, with 183,973 total contracts traded; 77% of the trading came from call options alone.
Implied volatility popped to 62% and now sits at the 32nd percentile of its one-year range. Premiums are pointing toward daily moves of 59 cents or 3.9%.
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.