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Monday’s Vital Data: Apple Inc. (AAPL), Oracle Corporation (ORCL) and Nvidia Corporation (NVDA)

Joseph Hargett

U.S. stock futures are headed higher this morning, pushing the major market indices toward record highs once again. Traders are brushing aside heightened concerns over tensions with North Korea and looking toward this week’s Federal Open Market Committee meeting.

Monday’s Vital Data: Apple Inc. (AAPL), Oracle Corporation (ORCL) and Nvidia Corporation (NVDA)

The two-day meeting, which wraps up Wednesday, isn’t expected to bring with it an interest rate hike, but Federal Reserve Chairwoman Janet Yellen is expected to lay the groundwork for unwinding the Fed’s $4.5 trillion balance sheet. Yellen will hold a press conference after the meeting.

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Against this backdrop, futures on the Dow Jones Industrial Average have risen 0.21%, S&P 500 futures have added 0.16% and Nasdaq-100 futures are up 0.09%.

Turning to options activity, volume was brisk on Friday, with about 18.3 million calls and 15.6million puts changing hands. Meanwhile, the CBOE single-session equity put/call volume ratio rose to 0.63, leaving the 10-day moving average steady at 0.60.

Drilling down on Friday’s volume, call volume on Apple Inc. (NASDAQ:AAPL) continued to decline heading into the weekend, hinting that AAPL stock options traders may be taking profits in the wake of last week’s lackluster iPhone X event.

Elsewhere, Oracle Corporation (NYSE:ORCL) drew mixed options activity following its poorly received first-quarter earnings report. Finally, call volume surged on Nvidia Corporation (NASDAQ:NVDA) after Evercore ISI boosted its price target on the shares.

Monday’s Vital Options Data: Apple Inc (AAPL), Oracle Corporation (ORCL) and Nvidia Corporation (NVDA)

Apple Inc. (AAPL)

The much-anticipated iPhone X is finally here … or rather it will be in November. The delayed launch data was just one of the myriad of issues investors were left to digest after last week’s Apple announcement event. Among other key issues was the fact that the new iPhone 8 would cost $1,000 — well above the industry standard and more than double the average Chinese consumer’s monthly salary. What’s more, there were no exclusive features announced for either the iPhone 8 or the iPhone X.

Initially, AAPL stock popped on the event, but the shares ultimately sold off on the news. Apple stock finished last week back below resistance at $160, and options traders appear to be taking profits off the table in anticipation of a continued decline.

AAPL options volume on Friday topped out at 649,000 contracts, with calls making up a below average 60% of the day’s take. What’s more, the October put/call open interest ratio rose last week from a reading south of 0.55 to today’s perch at 0.69.

In short, puts have been being added at a faster rate than calls in recent trading sessions. AAPL appears to be in the middle of a sentiment shift from bullish to bearish, and if the situation grows much worse, it could signal additional losses for the shares.

Oracle Corporation (ORCL)

Initial reports from Oracle’s first-quarter earnings report were good. The company topped expectations, posting a profit of 62 cents per share versus the consensus target for 60 cents. Revenue rose 7% to $9.2 billion, also topping analysts’ projections for $9.02 billion.

However, guidance was quite lackluster. Oracle said it would earn between 64 and 68 cents per share next quarter, with revenue growth of 2% to 4%. Analysts are looking for earnings of 68 cents per share on $9.49 billion in revenue.

As a result, ORCL stock plunged 8.3% in the two days following Oracle’s report. The drop elicited mixed reactions in the options pits, with some traders anticipating a rebound as ORCL stock dropped into oversold territory.

Volume on Friday topped 321,000 contracts, more than seven times ORCL’s daily average. Calls made up 57% of the day’s take. Looking out to October, the put/call OI ratio remains on the verge of a bullish extreme, arriving at 0.69. While ORCL stock took a beating following earnings, options traders appear to have given the shares the benefit of the doubt after a run up of more than 25% since the beginning of the year.

Nvidia Corporation (NVDA)

NVDA stock is back in the hot zone after analysts at Evercore SI implied that the shares could have 40% upside from current levels. According to Evercore, investors are “severely” underestimating the market potential of AI. While Evercore left its rating at “outperform,” the brokerage firm lifted its price target from $180 to a hefty $250 — making it the second highest target tracked by FactSet.

Options traders responded by flooding NVDA stock with call options. Volume rose to more than 439,000 contracts, more than tripling NVDA’s daily average. Furthermore, calls made up 65% of the day’s take. Looking out to October, there is surprisingly more room on the bullish bandwagon for options traders. Currently, the October put/call OI ratio arrives at a bearish reading of 1.06, with puts outnumbering calls among front-month options.

With NVDA breaking out to new all-time highs above $180, and looking to challenge $185 today, technical buyers could help push sentiment on the shares even higher as options traders chase the rally.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.

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