U.S. stock futures are off to a strong start this morning Ahead of the bell, futures on the Dow Jones Industrial Average are up 0.39%, and S&P 500 futures are higher by 0.37%. Nasdaq-100 futures have added 0.43%.
In the options pits, overall volume slumped on Monday with calls outpacing puts by their usual margin. Specifically, about 16.1 million calls and 13.7 million puts changed hands on the day.
The action over at the CBOE bucked the sleepy trend, however, with a big ramp in the single-session equity put/call volume ratio. The metric jumped to a six-week high at 0.71. Meanwhile, the 10-day moving average held its ground at 0.60.
Let’s take a closer look:
Traders are in a selling mood ahead of tomorrow morning’s earnings release from AT&T. Yesterday’s 2% beatdown marked the fifth straight down day and was bad enough to push T stock below the 50-day moving average. But the selling wasn’t isolated to AT&T only. Verizon (NYSE:VZ) also fell on the session.
The past three sessions saw above-average volume suggesting institutions were leaning on the sell button. Distribution days like these act as warning signs for would-be buyers assessing price action before piling in. Couple the damage with a looming earnings report and I see little reason to jump in AT&T ahead of the number.
On the options trading front, traders heavily favored puts. Total activity climbed to 288% of the average daily volume, with 330,713 contracts traded; 62% of the trading came from put options.
Implied volatility rallied to 24% or the 37th percentile of its one-year range. Premiums are baking in a $1.23 move or 3.8% into earnings.
Beyond Meat (BYND)
The power of plant-based meat was on full display Monday with BYND stock rocketing 10% higher. And the party is continuing premarket with the shares up another 5% to $203.40. If the gains hold, BYND will open at a record high bringing big-league profits to shareholders and a new level of pain to short sellers.
With Beyond Meat shares having tacked on an additional 56% in gains after gapping higher on June’s earnings release, expectations are flying high into next Monday’s quarterly report.
As with all stocks flirting with the stratosphere, there’s not really much negative to report on the price action front. The trend is robust and volume patterns heavily favor buyers.
Options trading saw heavy call demand on the session with total activity climbing to 243% of the average daily volume, with 263,096 contracts traded. Calls accounted for 67% of the day’s take.
Halliburton earnings delivered a much-needed boost to the energy sector. The oil services giant earned 35 cents per share on $5.93 billion in revenue. Although the top-line number marked a slight decline compared to year-ago revenues of $6.15 billion, buyers still found enough to celebrate. Keep in mind, the stock has dropped around 50% since last year, so we’re at a spot where the stock can rally on results being less bad than expected.
HAL stock was up 9.1% by the closing bell on heavy volume. The rally pushed HAL back above is 50-day moving average. If it can clear resistance at $24, then a run back toward $30 and the 200-day moving average over the coming weeks could be in the cards.
With the long-term trend still pointing lower, bullish plays should be kept on a tight leash, however.
On the options trading front, traders came after calls throughout the session. Activity ramped to 220% of the average daily volume, with 72,117 total contracts traded. Calls claimed 58% of the tally.
With the uncertainty of earnings now in the rearview mirror, implied volatility plunged to 34%. That lands it at the 31st percentile of its one-year range. Premiums are now pricing in daily moves of 51 cents.
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.