U.S. stock futures are trading lower amid mild profit-taking after a massive two-day rally.
Heading into the open, futures on the Dow Jones Industrial Average are down 0.33%, and S&P 500 futures are lower by 0.42%. Nasdaq-100 futures have lost 0.58%.
In the options pits, put activity finally relinquished its lead to calls reflecting bulls’ return. Overall volume continues to run above average with approximately 21 million calls and 18.5 million puts changing hands on the session.
The fear bid seen at the CBOE over the past week vanished. The single-session equity put/call volume ratio plunged to 0.62, matching its two-week low. Meanwhile, the 10-day moving average finally halted its ascent and ended the day at 0.73.
Let’s take a closer look:
Uber Technologies (UBER)
Uber shares are giving shareholders some wicked whiplash this week. Yesterday’s high volume, 8.2% rally showed strong optimism ahead of last night’s quarterly report. Unfortunately, the confidence was seriously misplaced, and the rally has been completely dismantled after hours following a dismal earnings announcement. UBER stock is set to open down 8.2% after losing $5.2 billion last quarter.
Yes, you read that right — a loss of over $5 billion in a single quarter. The company attributed the bulk of the damage to stock-based compensation for workers.
UBER is set for a critical test of support at the open. If the stock cracks this week’s lows near $38, a swift descent toward its post-IPO price at $36 would be in the cards. For now, the price chart is flashing a red light to would-be buyers.
On the options trading front, puts proved slightly more popular than calls on the session. Activity ballooned to 660% of the average daily volume, with 228,896 total contracts traded. Puts accounted for 53% of the tally.
Advanced Micro Devices (AMD)
Buyers swarmed Advanced Micro Devices yesterday after the company announced tech titans like Alphabet (NASDAQ:GOOGL,GOOG) and Twitter (NYSE:TWTR) are using the newest iteration of its processors for data centers.
AMD stock rallied 16% amid stratospheric levels of volume. The jump erased all that was lost after last week’s underwhelming earnings report in one fell swoop. It’s now a stone’s throw from all-time highs and sits back above all major moving averages.
Days like today illustrate why it’s so hard to bet against or short a company like AMD. The whiff of any new relationship or product deal brings buyers to the stock like starving hounds to a T-bone.
On the options trading front, call volume exploded. Total trading jumped to 315% of the average daily volume, with 969,274 contracts traded; 69% of the trading came from call options alone.
Implied volatility sits at 50% or the 20th percentile of its one-year range. Premiums are pricing in daily moves of $1.06 or 3.1%.
Roku’s trend of earnings-driven up gaps continued yesterday with a 21% gain. The rally pushed ROKU to a new record high of $123.45 on heavy volume. For the second-quarter, the popular streaming service posted a loss of 8 cents on revenue of $250.1 million.
Wall Street analysts were expecting a 22 cent loss on $224.4 million in revenue. The company also increased its full-year guidance and announced they added 1.4 million new accounts for the quarter.
Despite the nearly 300% year-to-date gain, there remain disbelievers aplenty. Roughly 10% of the stock’s float or 8.4 million shares are currently sold short. No doubt the continued squeezing of these bears will be one dynamic pushing us to higher prices.
On the options trading front, calls outpaced puts by a modest margin. Activity jumped to 291% of the average daily volume, with 242,278 total contracts traded. Calls accounted for 58% of the session’s sum.
A post-earnings volatility crush was on full display driving the reading down to 59% or the 22nd percentile of its one-year range. Traders now expect daily moves of $4.51 or 3.7%.
As of this writing, Tyler Craig held bullish positions in AMD. Check out his recently released Bear Market Survival Guide to learn how to defend your portfolio against market volatility.