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Friday’s Vital Data: eBay, JPMorgan Chase and Tesla

Tyler Craig

U.S. stock futures are galloping higher after a booming earnings release from bank boss JPMorgan (NYSE:JPM). In early morning trading, futures on the Dow Jones Industrial Average are up 0.91%, and S&P 500 futures are higher by 0.62%. Nasdaq-100 futures have added 0.50%.

Friday's Vital Data: eBay (EBAY), JPMorgan Chase (JPM) and Tesla (TSLA)

In the options pits, overall volume levels remained lackluster yesterday, with calls leading the way. Specifically, about 14.9 million calls and 12.5 million puts changed hands on the session.

However, with the distance between call and put volume narrowing, the CBOE single-session equity put/call volume ratio made a run for it to end the day at 0.67. It remains towards the center of its 2019 range, so the day-to-day shenanigans remain much ado about nothing. The 10-day moving average edged lower to 0.61.

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Here were three stocks that options traders loved on Thursday. eBay (NASDAQ:EBAY) fell 5% after Jeff Bezos included negative comments about the company in his annual shareholder letter. JPMorgan calls were hot ahead of this morning’s report. Finally, Tesla (NASDAQ:TSLA) gapped 2.8% lower on continued selling pressure.

Let’s take a closer look:

eBay (EBAY)

eBay shares fell as much as 5% yesterday on heavy volume. The culprit for Thursday’s sell-fest appears to be a growth comparison between eBay and Amazon (NASDAQ:AMZN) that Jeff Bezos included in his annual shareholder letter. Here’s the piece that sent bears on the rampage:

“Third-party sales have grown from $0.1 billion to $160 billion — a compound annual growth rate of 52%. To provide an external benchmark, eBay’s gross merchandise sales in that period have grown at a compound rate of 20%, from $2.8 billion to $95 billion.”

The drop sent EBAY stock back below its 50-day moving average for the first time this year. With horizontal support looming at $36, however, I suggest waiting for a further breakdown before sellers declare victory. Besides, earnings are around the corner on April 23, leaving little time for traders to slip in and out without having to brave the uncertainty of a quarterly report.

On the options trading front, traders went bananas for puts. Activity zoomed to 840% of the average daily volume, with 162,473 total contracts traded. A whopping 81% of the trading came from put options alone.

The uptick in demand lit a fire under the rise in implied volatility that was already occurring ahead of earnings. By day’s end, the measure had risen to 34%, which places it at the 50th percentile of its one-year range. Premiums are now pricing in daily moves of 77 cents, or 2.1%.


JPMorgan (JPM)

JPMorgan delivered robust earnings results during this morning’s quarterly report. Traders are rewarding the bank behemoth with a 3% gain premarket.

For the first quarter, JPM raked in earnings of $2.65 per share on $29.9 billion. Analysts were expecting earnings of $2.35 on $28.36 billion. With this morning’s gains, JPM stock is now up 12% year-to-date.

The price action for the financial sector has been a mess, and JPMorgan is no exception. Inverted yield curve fears sent the sector skidding last month, and the subsequent recovery has only served to prolong the multimonth trading range. This morning’s up-gap could finally break the stalemate and kickstart a bonafide uptrend.

Ahead of the report, options traders were keen on call options. Total activity grew to 203% of the average daily volume, with 128,684 total contracts traded. Calls accounted for 62% of the sum.

Options were pricing in a gap of $1.92, or 1.8%, so this morning’s 3% pop is significant and should deliver profits to those carrying long volatility plays like straddle into the number.

Tesla (TSLA)

Tesla has been a mainstay atop the most-active options leaderboard. Its heightened volatility makes it a popular destination for the degenerate gambler. More so than most stocks, TSLA is driven by random news events that have created a price chart littered with gaps.

The latest turn in the company’s saga is its decision to stop selling the $35k version of its Model 3 online mere weeks after its debut. Interested customers now have to either purchase through telephone or in store.

Tesla’s price chart remains bearish. Its downtrend is submerged beneath falling 200-day, 50-day, and 20-day moving averages giving little reason for optimism. On the options trading front, calls and put volumes were neck and neck on the day. Activity lifted to 131% of the average daily volume, with 281,952 total contracts traded. Puts barely edged out calls by accounting for 52% of the total.

Implied volatility drifted sideways at 66% and remains at the 38th percentile of its one-year range. Premiums are pricing in daily moves of $11.14, or 4%.

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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