U.S. stock futures are mixed heading into the open this morning. Rising bond yields are once again creating turmoil on Wall Street.
Yield on the 10-year Treasury is inching closer to 3%, hitting its highest levels since 2014. Not only are rising yields a sign of inflation, but higher yields also make stocks less attractive to value investors.
Against this backdrop, Dow Jones Industrial Average futures are up 0.18%, S&P 500 futures are up 0.22% and Nasdaq-100 futures have gained 0.33%.
Turning to the options pits, volume was well above average on Friday. Overall, about 22.8 million calls and 20.9 million puts changed hands on the session. The CBOE single-session equity put/call volume ratio ticked higher to 0.65. The 10-day moving average hit a one-month low of 0.63.
On Friday, Apple Inc. (NASDAQ:AAPL) options activity spiked after Morgan Stanley cut its price target on AAPL stock. Meanwhile, Netflix, Inc. (NASDAQ:NFLX) call options were popular following reports the company could buy a string of movie theaters. Finally, Advanced Micro Devices, Inc. (NASDAQ:AMD) options remained volatile ahead of this week’s quarterly report.
Apple Inc. (AAPL)
With just over a week until Apple’s fiscal second-quarter earnings report, Morgan Stanley has grown cautious. The brokerage firm cut its price target on AAPL stock to $200 from $203 citing weaker iPhone sales. Apple stock investors have heard this tune ahead of every quarterly report for the past year, but the news still had an impact on sentiment.
For instance, Friday’s options volume, which soared to more than 1 million contracts, was divided between puts and calls. With activity nearly tripling AAPL’s norm, options traders only slightly favored calls (55%) over puts (45%). Apple typically sees calls make up 62% of its daily activity, especially ahead of earnings.
Additionally, weekly May 4 options implieds have risen in the past week. May 4 Apple options are now pricing in a post-earnings move of about 5.2%, up from 4.2% last week.
Netflix, Inc. (NFLX)
It seems Netflix took its movies getting snubbed by film awards pretty hard. Rumors are now circulating that Netflix is interested in buying Landmark Theaters, which operates screens in L.A. and New York City.
Netflix sentient rose on the rumors. Options volume on Friday jumped to 249,000 contracts, or roughly 1.5 times NFLX’s daily average. Calls made up 62% of the day’s take, well above the norm for Netflix options traders.
That said, there is still a long way to go before Netflix’s short-term sentiment backdrop becomes bullish. Currently, the May put/call open interest ratio rests at 0.90, with puts just shy of being equal to calls in the front-month series.
Advanced Micro Devices, Inc. (AMD)
AMD stock rallied sharply at the beginning of last week. Investors cheered the release of the company’s latest Ryzen lineup, sending the shares to a one-month high just north of $10.50. Selling pressure took hold late in the week, however, and AMD stock cam crashing back to support near $10
Earnings arrive this Wednesday, with analysts expecting a profit of 9 cents per share. In the same quarter last year, AMD lost 4 cents per share. Revenue is expected to surge 59% year-over-year to $1.57 billion. EarningsWhispers.com puts the whisper number at earnings of 11 cents per share.
AMD’s options volume on Friday was quite contentious. More than 243,000 contracts changed hands, with calls only managing 53% of the day’s take. That negativity isn’t apparent in the weekly April 27 series, however. Currently, the April 27 put/call OI ratio rests at 0.59.
As for implieds, AMD options traders are pricing in a potential post-earnings move of about 10.3% for the shares. This places the upper bound just north of $11 and the lower bound below $9.
As of this writing, Joseph Hargett was long on Advanced Micro Devices, Inc. (AMD) stock.
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