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Friday’s Vital Data: National Oilwell Varco, Halliburton and American Airlines

Tyler Craig

U.S. stock futures are trading higher this morning in a rebound attempt to pare yesterday’s large losses.

Heading into the open, futures on the Dow Jones Industrial Average are up 0.47%, and S&P 500 futures are higher by 0.48%. Nasdaq-100 futures have added 0.38%.

In the options pits, yesterday’s plunge sent put activity soaring while overall volume amped to above-average levels. Specifically, about 19.6 million calls and 22.5 million puts changed hands on the session.

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Over at the CBOE, the fear fest led the single-session equity put/call volume ratio to its second-highest close of the year at 0.80. At the same time, the 10-day moving average climbed to a new high for 2019 at 0.73.

Options traders zeroed in on oil-related stocks Thursday. National Oilwell Varco (NYSE:NOV) and Halliburton (NYSE:HAL) both plunged to new 52-week lows amid heavy volume. American Airlines (NYSE:AAL) also saw unusual options activity as it tests a critical support zone.

Let’s take a closer look:

Friday's Vital Data: National Oilwell Varco, Halliburton and American Airlines options trading

National Oilwell Varco (NOV)

Yesterday’s crude oil crash sent oil stocks sliding. National Oilwell Varco dropped 4.41% on the highest single-session volume in two years. 13.2 million shares changed hands while the stock fell to its lowest levels since 2008.

The downside acceleration worsens what was already a strong bearish trend. NOV stock now sits well below the falling 200-day, 50-day and 20-day moving averages. We don’t have any major support until $16, which is $6 or 27% away. You bottom fish at your peril here.

On the options trading front, puts only slightly outpaced calls on the day. Total activity swelled to eye-popping levels at 6,110% of the average daily volume, with 121,952 contracts traded. Puts accounted for 51% of the sum.

Implied volatility rocketed higher on the day to 42%, placing it at the 73rd percentile of its one-year range. Premium sellers will be happy to note this is the highest level of 2019. The expected daily move is now 59 cents or 2.7%.

Halliburton (HAL)

NOV wasn’t the only oil stock traders swarmed. Halliburton also saw a groundswell in activity on a day that sent the oil services giant to a new nine-year low. The 5% thrashing saw 24 million shares change hands

HAL stock’s price chart largely mirrors that of NOV. Every major moving average is falling, leaving ample overhead resistance to reject future rally attempts. Distribution days also litter the landscape showing strong institutional selling pressure. Until a definitive bottoming pattern emerges, bulls should stay away.

On the options trading front, calls proved more popular than puts by a hair. Activity climbed to 630% of the average daily volume, with 169,729 total contracts traded. Calls claimed 51% of the tally.

Implied volatility jumped to 44% or the 61st percentile of its one-year range. Premiums are now baking in daily moves of 65 cents or 2.8%.

American Airlines (AAL)

The selling intensity reached a fever pitch yesterday for American Airlines. Two-days of distribution reveal institutions are slamming the sell button. The downside pressure has driven AAL stock to test critical support at the $29 zone. If the floor fails, watch out below!

Like its predecessors, AAL’s price trend is cruising lower beneath falling moving averages across time frames. Rallies remain suspect, and the path of least resistance is undoubtedly lower. That said, the stock is oversold and testing major support, so a short-term rebound isn’t out of the question.

The session saw unusual options activity with calls leading the way. Total activity jumped to almost four times or 372% of the average daily volume. In total, 117,445 contracts traded with 57% of the tally coming from calls.

Implied volatility ticked higher to 39% or the 26th percentile of its one-year range. Premiums are pricing in daily moves of 72 cents or 2.4%.

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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