Wednesday’s Vital Data: Pfizer, Advanced Micro Devices and Apple

U.S. stock futures are set to open in the green after Apple (NASDAQ:AAPL) earnings sent shares of the tech titan 4% higher after hours. Optimism that the Federal Reserve will deliver during today’s statement is also aiding buyers.

Wednesday's Vital Data: Pfizer, Advanced Micro Devices and Apple

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Against this backdrop, futures on the Dow Jones Industrial Average are up 0.24%, and S&P 500 futures are higher by 0.18%. Nasdaq-100 futures have added 0.38%.

In the options pits, put volume ramped to narrow the usual wide gap between them and call options. Overall activity settled slightly below average with about 15.9 million calls and 14.7 million puts changing hands on the session.

The jump in put demand was seen at the CBOE as well, with the single-session equity put/call volume ratio climbing to 0.73 — a six-week high. Meanwhile, the 10-day moving average rallied to a six-week high of its own at 0.66.

Options traders once again focused on earnings. Pfizer (NYSE:PFE), Advanced Micro Devices (NASDAQ:AMD) and Apple all saw heavy trading around their quarterly reports.

Let’s take a closer look:

options trading charts

Pfizer (PFE)

Pfizer shares were destroyed after Monday’s early release of quarterly earnings, suffering their largest drop in over a decade. Yesterday’s 6.4% plunge continued the selloff that kicked off Monday after the company announced plans to merge one of its business units with Mylan (NASDAQ:MYL).

The Dow component did beat earnings forecasts, reporting adjusted earnings-per-share of 80 cents versus estimates looking for 75 cents. Unfortunately, revenue was light at $13.3 billion, marking a 2% year-over-year decrease. Wall Street was looking for $13.4 billion.

With the beatdown, PFE stock is on shaky footing. It’s well below all major moving averages suggesting sellers have full control of the trend across time frames. Tuesday’s swoon dropped shares to critical support near $39. A slip below this will complete a one-year topping pattern sending warning signs to chart watchers.

On the options trading front, calls slightly outpaced puts despite the day’s drubbing. Total activity swelled to 488% of the average daily volume, with 217,538 contracts traded. Calls claimed 52% of the tally.

Advanced Micro Devices (AMD)

Last night, Advanced Micro Devices faced a critical test for its meteoric 2019 rise: earnings. The report helped determine if this year’s 83% rise was justified and perhaps deserving of more, or if buyer’s optimism had carried AMD stock too far.

With the stock set to open down 3.9%, it’s fair to say traders were unimpressed by the numbers but not enough to dismantle the beautiful uptrend that has been built.

For the second quarter, Advanced Micro Devices raked in $1.53 billion, which beat estimates by $10 million. EPS came in at 8 cents, which was in-line with forecasts. What investors didn’t like was the company’s downbeat forward guidance. AMD walked back earlier guidance for a high-single-digit percentage increase in revenue for 2019. They now expect only a mid-single-digit percentage increase.

With AMD stock poised to open near $32.50, it’s still a ways away from any major support tests. A break below $31 would be concerning. Until then, the down gap should be viewed as noise.

On the options trading front, traders favored calls ahead of the report. Activity grew to 175% of the average daily volume, with 451,953 total contracts traded; 57% of the trading came from call options alone.

Premiums were pricing in a gap of 7.7%, so this morning’s 4% whack is well within expectations and should bring profits to volatility sellers.

Apple (AAPL)

All eyes were on Apple after the bell Tuesday. The technology giant delivered numbers worth celebrating, including revenue of $53.8 billion and net income of $10 billion. Services revenue was a highlight showing a 13% jump to add $11.5 billion to the company’s take for the quarter.

AAPL stock is opening up just shy of $8 or about 4% this morning. The jump will push the company’s market cap back above $1 trillion. Last year’s peak of $233.47 still stands as a worthy upside target and barring some major market correction; there’s no reason why we don’t get there in the coming months.

The technical posture of Apple shares is solid. The past two months have seen a strong uptrend emerge, complete with rising 20-day and 50-day moving averages.

On the options trading front, puts ruled the day ahead of earnings. Activity popped to 212% of the average daily volume, with 726,603 total contracts traded. Puts accounted for 54% of the session’s sum.

The options board was forecasting an $8 move after earnings, so this morning’s gap is right in-line with expectations. Three cheers for market efficiency.

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.

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