U.S. stock futures are trading higher after a quiet session on the Street Monday. Today marks the beginning of the fourth quarter. Heading into the open, futures on the Dow Jones Industrial Average are up 0.28%, and S&P 500 futures are higher by 0.29%. Nasdaq-100 futures have added 0.37%.
Yesterday’s action in the options pits was about as quiet as it gets. Calls outpaced puts by a slim margin while overall volume fell way below average levels. By day’s end, only 13.8 million calls and 13 million puts changed hands.
The absence of any panic whatsoever pushed the CBOE single-session equity put/call volume ratio down to 0.67, matching the current location of the 10-day moving average.
Let’s take a closer look:
Aurora Cannabis (ACB)
The unwind in marijuana stocks continued on Monday, and Aurora Cannabis fell to a new 52-week low on above-average volume. Ever since last month’s earnings release, ACB stock has seen relentless selling. It’s now down 32% in three weeks.
Investors were not happy about the company whiffing on fourth-quarter revenue guidance mere weeks after the company provided its updated numbers.
On the technical front, everything says buyers beware. The downtrend has been extremely consistent, with the declining 20-day and 50-day moving averages rejecting every single rally attempt. Until the series of lower lows and lower highs stops, don’t bet on a recovery.
On the options trading front, calls led the charge Monday despite the sharp descent. Activity swelled to 114% of the average daily volume, with 56,250 total contracts traded. Calls accounted for 63% of the sum.
Implied volatility popped to 85% and is nearing an eight-month high.
Apple shares jumped 2.4% after J.P.Morgan boosted its price target for the tech giant to $265 a share from $243. Here’s the money quote shared by analyst Samik Chatterjee explaining the rationale for the move.
“We are modestly raising our iPhone volume forecasts and expect investor sentiment on AAPL shares to improve materially given the firm’s ability to drive upward revision to volume expectations despite the 2019 product cycle largely considered to be a muted one.”
AAPL stock’s price chart is one of the best on the Street right now. Monday’s pop created a high-base breakout that should propel the stock higher throughout the week. Last year’s peak (and the record highs) of $233.47 stand as the upside target.
On the options trading front, traders came after calls throughout the session. Total activity actually fell short of the average daily volume at 94%. Only 432,799 contracts traded, but it was such a quiet enough day elsewhere that AAPL still landed atop the most-actives leaderboard. 60% of the trading came from call options alone.
Implied volatility held steady at 29% or the 31st percentile of its one-year range. Premiums are baking in daily moves of $4.04 or 1.8%. Bull call spreads are a smart trade if you’re betting on the upside.
Beyond Meat (BYND)
Market-moving news was lacking Monday for Beyond Meat, but that didn’t prevent option traders from swarming. Traders continue to grapple with the implications of last week’s positive news that McDonald’s was testing out a plant-based burger in Canada. If successful, the trial could potentially roll out in thousands of Golden Arches across the land boosting Beyond Meat’s profits.
Since popping last Thursday over 11% on powerful volume, the stock has settled down. Its price trend remains tricky to game because it’s essentially stuck in a range and subject to random news-driven moves. That said, there is a clear level of support and resistance at $135 and $170 so consider those the zones to watch.
On the options trading front, traders favored calls on the session. Total activity only climbed to 91% of the average daily volume, with 73,751 contracts traded. 66% of the trading came from call options alone.
As of this writing, Tyler Craig didn’t hold positions in any of the aforementioned securities. For a free trial to the best trading community on the planet and Tyler’s current home, click here!