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Tue, December 10 at 7:00PM ET

Monday’s Vital Data: Amazon, Apple and Microsoft

Options activity provides a look at expectations on AMZN, AAPL and MSFT stock

U.S. stock futures are trading lower as traders return from the weekend. Fortunately, the selling pressure is light, and we’ve avoided a repeat of last Monday’s dreadful open.

Monday's Vital Data: Amazon, Apple and Microsoft
Source: Shutterstock

Ahead of the bell, futures on the Dow Jones Industrial Average are down 0.48%, and S&P 500 futures are lower by 0.50%. Nasdaq-100 futures have lost 0.55%.

In the options pits, call volume led the way while overall volume fell back toward average levels. About 19.2 million calls and 16.9 million puts changes hands on Friday.

Meanwhile, over at the CBOE, the single-session equity put/call volume ratio climbed back to 0.68. It’s an ordinary reading in the middle of the 2019 range. The 10-day moving average is still being impacted by last week’s super spike in the metric and rallied to 0.74.

Options traders came after tech stocks Friday. Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) all landed atop the most-active options leaderboard.

Let’s take a closer look:

options trading chart

Amazon (AMZN)

Amazon shares slid alongside the broader market selloff on Friday. AMZN stock fell 1.4% and gave back the majority of Thursday’s gains. If there was a bright note on the day, it’s that the volume was light, suggesting mild profit-taking after an intense two-day run instead of an institutional-driven exodus.

That said, the posture of Amazon’s price trend remains on precarious footing. Bulls successfully defended last week’s test of the 200-day moving average, but with the 20-day moving average careening lower and the 50-day moving average looming overhead, much work remains before the long-term uptrend is re-established.

For now, last week’s lows near $1,750 is the line in the sand to watch. If we breach that level, watch out below!

On the options trading front, calls outpaced puts despite the day’s drop. Total activity grew to 112% of the average daily volume, with 209,672 contracts traded. Calls added 59% to the day’s take.

Implied volatility rose to 28% or the 20th percentile of its one-year range. Premiums are now pricing in daily moves of $32.16 or 1.8%.

Apple (AAPL)

Apple finally found some relief from the breakneck volatility seen over the past week and a half. Friday ended with a doji candle reflecting a pause in the ongoing battle. A robust sell-the-news response to earnings coupled with worries of how the trade war escalation will impact the company have turned shareholder anxiety up a notch.

Fortunately, the technical damage inflicted on its price chart is tame compared to the destruction elsewhere. With last week’s rally, AAPL stock was able to return to the northside of its 50-day moving average.

This morning’s weakness will test buyers’ desire to keep it there, though. At the time of this writing, Apple shares are slated to open down just shy of 1%, which should push AAPL stock back below the 50-day. Regardless of the outcome, last week’s lows of $193 need to hold or else the technical picture will aggressively deteriorate.

On the options trading front, demand was split 50-50 between calls and puts. It’s an appropriate balance on a doji day, I suppose. Activity rose slightly to 105% of the average daily volume, with 518,058 total contracts traded.

Implied volatility jumped to 31% or the 43rd percentile of its one-year range. Premiums are baking in daily moves of $4.05 or 2%.

Microsoft (MSFT)

Microsoft is the best-looking stock of the bunch today. Last week’s beating only left the software giant slightly beaten, and the bruising was all but healed by the weekend. MSFT stock is now less than 3% from a new record.

The dip below its rising 50-day moving average only lasted a day, reflecting just how aggressive buyers remain. On a relative basis, MSFT is one of the strongest players in the technology sector or the entire market for that matter.

If you’re a believer that strength begets more strength, then Microsoft has to be one of your top picks going into next week.

On the options trading front, calls were more popular than puts on Friday. The activity ended just shy of the average daily volume at 97% with 229,499 total contracts traded. Calls contributed 63% to the session’s sum.

The increased demand drove implied volatility up to 26%, which also landed it at the 26th percentile of its one-year range. The expected move each day now stands at $2.22 or 1.6%.

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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