U.S. stock futures are crawling higher this morning. However, yesterday’s failed rally after a strong open signals buyers still lack conviction.
Ahead of the bell, futures on the Dow Jones Industrial Average are down 0.06% and S&P 500 futures are higher by 0.20%. Meanwhile, Nasdaq-100 futures have added 0.38%.
In the options pits, call volume made a comeback, helping to drive overall volume north of average levels. By day’s end, some 17.1 million calls and 13.7 million puts changed hands.
Those calls didn’t translate over to the CBOE, where the single-session equity put/call volume ratio climbed to 0.67 – a two-week high. At the same time, the 10-day moving average closed in a two-month low at 0.61.
Options traders swarmed the tech sector yesterday on the heels of better-than-expected earnings from Micron (NASDAQ: MU ). Intel (NASDAQ: INTC ) zipped higher amid a widespread rally in semiconductor stocks. Apple (NASDAQ: AAPL ) rallied back after Tuesday’s beatdown to close near a six-week high. Finally, Nvidia (NASDAQ: NVDA ) jumped alongside Micron and is receiving a boost this morning after Wedbush Securities initiated coverage with an outperform rating.
Let’s take a closer look:
Micron’s rosy earnings report lit a fire under semiconductor stocks. Intel capitalized on the favorable backdrop, rallying 2.86% on substantial volume. The jump places INTC stock on the cusp of completing a cup-and-handle formation that could spell the end of its downtrend.
INTC is testing its 50-day and 200-day moving averages which loom large overhead. A successful break above both will solidify bulls’ standing and help confirm the staying power of its nascent uptrend.
On the options trading front, traders favored calls alongside the stock rally. Total activity climbed to 113% of the average daily volume, with 86,004 contracts traded. Calls claimed 55% of the session’s sum.
There wasn’t much to report on implied volatility movements. The reading drifted on the day at 29% or the 37th percentile of its one-year range, suggesting premiums are neither cheap nor expensive. Traders are baking in daily moves of 87 cents per day or 1.8%, so set your expectations accordingly.
Apple barely made it atop the options leaderboard Wednesday, but its price chart was too pretty to pass up. The 2.16% rally marked a big turnabout after Tuesday’s fall. The resurgence in volume added further legitimacy to the recovery and suggests the breakout setup now confronting us is likely to see upside follow through.
For AAPL, $201 is the line in the sand. A break above it sets the tech giant up for a run towards April’s high of $215.
On the options trading front, calls proved slightly more popular than puts. Total activity settled at 99% of the average daily volume, with 416,439 contracts traded. The fact that a stock that didn’t even eclipse its normal daily volume landed on the top ten most-active options list says something about how boring the summer doldrums have become.
Implied volatility drifted on the session and remained at 28% or the 32nd percentile of its one-year range. Premiums are pricing in daily moves of $3.55 or 1.8%.
Intel wasn’t the only chip stock ramping alongside Micron. Nvidia shares also received a boost, gaining 5.14% on the session. The fun continues this morning with NVDA stock up another 2% premarket. Today’s gains came after Wedbush Securities initiated coverage with a rating of outperform and a price target of $184.
This month’s gains have resurrected Nvidia shares from the deathly state they were left in by May’s deathly dive. With today’s up gap, the stock will officially reclaim the high ground above the 50-day moving average and set themselves up for a run toward the 200-day moving average near $180.
The long-term trend remains a mess, and further gains are needed before righting the ship, but June’s rebound has started to heal the damage.
On the options trading front, traders aggressively chased calls. Total activity grew to 137% of the average daily volume, with 193,652 contracts traded. Calls accounted for 59% of the tally.
Despite the price ramp and uptick in options trading, implied volatility held steady on the day at 41% or the 23rd percentile of its one-year range. Premiums remain cheap and are pricing in daily moves of $4.16 or 2.6%.
As of this writing, Tyler Craig didn’t hold a position in any of the aforementioned securities. Check out his recently releasedBear Market Survival Guideto learn how to defend your portfolio against market volatility.
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