Stock futures US trading lower this morning, indicating a weak start to the day. Wall Street takes a breather this morning after a string of solid gains. The sentiment remains bullish, however, backed by strong first quarter corporate profits.
Heading into the open, the Dow Jones Industrial average , the MICEX index fell 0.27%, the S&P 500 futures slipped 0.28% and the Nasdaq-100 index , the MICEX index declined 0.35%.
Turning to the options pits, volume Wednesday was well above average. Overall, about 20.7 million and 16.8 million calls puts crossed at the session. Index cboe one session equity put ratio/ring volume fell to 0.56, reaching a monthly low. A 10-day moving average dropped to 0.64.
Taking a closer look at the environment options, Micron technology, Inc. (Nasdaq:MU) was to cause severe after the stock’s recent rise. But technical resistance may stand in the way of Manchester United shares.
Meanwhile, International business machines (Ticker NYSE:IBM) saw a call traders rush to the exit after the earnings dip. Finally, Alibaba group holding Ltd (NYSE Ticker:Baba) options traders prepare for next week’s quarterly report.
Micron Technology, Inc. (MU)
I said back on March 16 that the micron stock was vulnerable to a short-term correction due to extreme levels of bullish sentiment. Stock continued to fall almost 25%, as a bump-and-run technical picture played out. After reaching a low near $48.50, the stock of MU rebounded sharply, supported by the bullish confirmation of Mizuho.
Shares of Manchester United is now at an important juncture, as the stock looks to test resistance at $42, the region which had rendered solid support. Traders options MU got another breakthrough. Yesterday volume exceeded 323,000 contracts for MU. Calls made up a significant 67% of this activity.
Looking at the options, maybe it’s safe to say that bullish sentiment is not actually died in the MU stock. Can supply ratio/open tender interest at 0.60, with bullish calls almost doubling puts bearish. Moreover, there are more than 30 000 calls open in may – $60 and possibly $70, which indicates high expectations for MU stock.
If you picked up MU near it lows, protective puts is not such a bad form of insurance right now.
IBM yesterday morning posted solid quarterly earnings, but these factors have not been as impressive. Adjusted profits and revenue exceeded analysts ‘ expectations, but a one-time tax benefits was largely responsible for the outperformance.
Revenue growth, while positive for the second consecutive quarter, remained sluggish. In addition, the recommendations have not changed on expectations of income growth on AI and growth of the cloud.
However, IBM options traders have remained mostly optimistic. The volume rose to more than 184,000 contracts, with calls up to 61% on day take. Traders avoided the April series of options may not in favor of June, where call open interest increased by $150 to $175 beats.
Alibaba group holding Ltd (Baba)
Chinese e-Commerce Behemoth alibaba will release its fiscal fourth quarter report on Friday, may 4. Currently, analysts expected a profit of 88 cents a share, up 27% compared to the same quarter last year. The company is expected to increase by 52% to 9.27 billion.
Yesterday traders options Baba continued his attack on the calls. Volume rebounded to 237,000 contracts, with calls, up to 67% on the day take. Resulted in recent attention to a woman of call options weekly 4 can supply coefficient/call OI has fallen to a lowly reading of 0.30. In other words, calls more than triple puts among options most affected by the quarterly report women.
4 may option implieds pricing in a post-earnings move of about 7% for stock a woman. This imposes an upper limit on $195.55 and below $169.80.
At the time of this writing, Joseph Hargett does not occupy a position in any of the above securities.