U.S. stock futures are hovering near unchanged as traders gear up for this week’s Federal Reserve meeting.
Heading into the open, futures on the Dow Jones Industrial Average are up 0.06%, and S&P 500 futures are higher by 0.04%. Nasdaq-100 futures have added 0.09%.
In the options pits, the tagging of yet another new record for stocks spurred call volume on the session, even as overall volume levels ended only slightly above average. Specifically, about 19.8 million calls and 16.2 million puts changed hands on the session.
Call option popularity made waves at the CBOE, where the single-session equity put/call volume ratio slipped to 0.60 to match its two-week low. The 10-day moving average continued its trend of higher readings with a move toward 0.63.
Options traders aimed at quarterly earnings reports. Starbucks (NASDAQ:SBUX), Twitter (NYSE:TWTR) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) all saw heavy trading on the session.
Let’s take a closer look:
Starbucks (SBUX)
Starbucks shares went bananas on Friday after the company reported financial results that beat estimates. The coffee giant posted earnings, revenue and same-store sales that all came in ahead of analyst forecasts. And traders were all too willing to shower SBUX stock with gains. Its shares rocketed up 9% to $99.11 amid heavy volume.
All told, that brings Starbucks’ year-to-date rise to 54%. For comparison, the Nasdaq is only up 27% for 2019.
For the quarter, revenue climbed to $6.82 billion, and earnings-per-share rose to 78 cents. Both metrics mark substantial growth versus the year-ago quarter’s performance, which saw earnings of 62 cents on $6.31 billion.
The price action for SBUX leaves little to complain about. The uptrend has been relentless, and all major moving averages are rising in bullish fashion. While it may be challenging to chase after such a big one-day jump, the stock is a definite buy candidate into any weakness.
On the options trading front, traders came after calls with a vengeance. Total activity boomed to 790% of the average daily volume, with 242,380 contracts traded. Calls claimed 60% of the day’s take.
Implied volatility sank to 22% or the 34th percentile of its one-year range.
Twitter (TWTR)
Twitter scored a second straight price jump on earnings to keep its recovery efforts alive. Although the gains were pared by the closing bell, TWTR stock still captured a 9% rise amid its highest volume session since April’s report.
The social media king racked up $841 million in revenue to sail past the Street’s estimate of $829 million according to Refinitiv. That translated into adjusted earnings of 20 cents per share, which beat out analyst estimates of 19 cents. Its new metric to reflect engagement levels, monetizable daily active users (mDAUs), rose to $139 million marking a 14% year-over-year increase.
With the day’s gains, TWTR stock tagged a new 52-week high and is now eyeing last year’s peak of $47.79. The 20-day, 50-day and 200-day moving averages are all pointing higher, making Twitter shares a tempting buy into weakness.
On the options trading front, calls outpaced puts by a wide margin. Total activity swelled to 426% of the average daily volume, with 325,735 contracts traded; 69% of the trading came from call options alone.
The volatility crush was on full display with implied volatility plunging to 33% or the 8th percentile of its one-year range. Premiums are now pricing in daily moves of 85 cents or 2%.
Alphabet (GOOGL)
The trend of big price jumps on expectation-beating numbers continued with Alphabet. The company smashed expectations and surged 10%. It’s now within striking distance of new record highs. Let’s dig into the numbers.
Revenue increased by 19.3% versus the year-ago quarter to $38.94 billion. Net income grew to $9.95 billion, or $14.21 per share, marking a 21% jump versus the year-ago quarter. The number shattered forecasts by $2.88 per share. Another bright spot from the report was the company’s announcement of a $25 billion share repurchase plan.
On the options trading front, calls were the hot ticket. Activity grew to 407% of the average daily volume, with 120,331 total contracts traded. Calls accounted for 66% of the session’s sum.
Implied volatility tumbled to 16% or the 4th percentile of its one-year range. Premiums are now pricing in daily moves of $12.67, or 1%.
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.
