U.S. stock futures are heading for a sleepy open.
Ahead of the bell, futures on the Dow Jones Industrial Average are up 0.01%, and S&P 500 futures are higher by 0.02%. Nasdaq-100 futures have added 0.09%.
In the options pits, call volume made a comeback despite stocks slipping for the first time in six sessions. Overall volume settled near average levels with about 17.6 million calls and 13.5 million puts changing hands.
Meanwhile, over at the CBOE, the distance between puts and calls narrowed, driving the single-session equity put/call volume ratio up to 0.62 — a one-week high. The 10-day moving average drifted sideways at 0.60.
United Airlines (UAL)
United Airlines shares took flight yesterday ahead of last night’s earnings release. The 2.85% ramp delivered a robust breakout just in time for the unveiling of their second-quarter profits. For the three months, UAL scored adjusted earnings of $4.21 per share on revenue of $11.4 billion. Analysts were calling for earnings of $4.09 on $11.36 billion in revenue.
UAL stock is trading up just shy of 1% premarket following the release.
With its price trend now cruising strongly above rising 20-day and 50-day moving averages, and with it having finally departed its 2019 trading range, the future looks bright for the company’s shares. Consider $100 the next upside target.
On the options trading front, calls and puts proved equally popular ahead of last night’s report. Total activity rocketed to 724% of the average daily volume, with 100,995 contracts traded. Puts barely edged out calls to claim 51% of the day’s take.
Premiums were pricing in a move of $4.10 post-earnings, so the 50 cent pop this morning is well within expectations. Look for volatility sellers to score a big win at the open.
Roku’s bid for the market’s hottest stock continued in earnest Tuesday with its shares rocketing 7.3% higher to a new record. The culprit for the latest round of its ongoing buying binge was Amazon’s (NASDAQ:AMZN) Prime Day, which saw strong sales of televisions equipped with Roku technology as well as Roku streaming devices.
The meteoric rise in ROKU stock this year has been a sight to behold. It’s now up 265% year-to-date and is followed by momentum traders across the land.
On the options trading front, traders came after calls with a vengeance. Activity swelled to 296% of the average daily volume, with 214,010 total contracts traded; 63% of the trading came from call options alone.
Implied volatility rallied to 84%, placing it at the 66th percentile of its one-year range. Premiums are baking in daily moves of $5.93 or 5.3%.
United States Steel (X)
Steel stocks were percolating yesterday, and United States Steel was one of the best performers. X stock rallied 3.6% and is up another 0.73% premarket. The news was light, so I’m chalking the rally up to rotation into the beaten-down sector. Time will tell if it’s a one-off or the start of a more sustained recovery.
The climb does put an exclamation point on the stock’s recent higher swing low. With the follow-through, X shares now sit above the 50-day and 20-day moving averages and are signaling a bottom could be in for the trend. For now, at least. We’ve seen many such reversal attempts fail in the past.
Nonetheless, as long as support at $13.15 holds, buyers hold the upper hand.
On the options trading front, calls were the hot ticket all day long. Activity grew to 186% of the average daily volume, with 105,832 total contracts traded. Calls accounted for 73% of the session’s sum.
Implied volatility ticked up to 60% or the 65th percentile of its one-year range. Premiums are now baking in daily moves of 57 cents or 3.8%, so adjust your expectations accordingly.
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.