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

Joseph Hargett

U.S. stock futures are pointed lower this morning, as Wall Street continues to struggle with the idea of tightening monetary policy. Last week, the Federal Reserve promised to begin quantitative tightening, signaling the beginning of the end for easy money. Furthermore, there are a slew of Fed speakers this week, Federal Reserve Chairwoman Janet Yellen, on Tuesday, and Vice Chair Stanley Fischer, on Thursday.

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

As a result, futures on the Dow Jones Industrial Average are down 0.02%, S&P 500 futures are off 0.04% and Nasdaq-100 futures have slipped 0.09%.

In the options pits, volume remained below average and put volume gained considerable traction. Overall, about 12.3 million calls and 12.7 million puts changed hands on Friday, pushing the daily put/call volume ratio north of 1.00. On the CBOE, the single-session equity put/call volume ratio jumped to 0.77 — a six-week high — while the 10-day moving average held at 0.63 in one-month high territory.

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Taking a closer look at Friday’s volume, Tesla Inc (NASDAQ:TSLA) logged its worst week in two months on Model 3 production and profitability concerns. Elsewhere, Nvidia Corporation (NASDAQ:NVDA) retreated on analyst projections that demand from cryptocurrency miners is beginning to cool down. Finally, short lines for the iPhone 8 release weighed heavily on Apple Inc. (NASDAQ:AAPL) options activity.

Monday’s Vital Options Data: Tesla Inc. (TSLA), Nvidia Corporation (NVDA) and Apple Inc (AAPL)

Tesla Inc. (TSLA)

TSLA stock logged its worst losing streak in two months last week, dropping 7.6% by the close on Friday.

Concerns that Model 3 production isn’t ramping up fast enough and Jefferies’ prediction that Tesla would lose money until at least 2020 provided a case for TSLA bears. Jefferies also initiated coverage on TSLA stock with an  “underperform” rating and a $280 price target — a 20% drop from current levels.

Option volume on TSLA was strong on Friday, with more than 288,000 contracts changing hands — more than doubling the stock’s average daily volume. Calls only made up 53% of that activity, though, arriving below average for TSLA. Meanwhile, front-month October puts remained popular with TSLA, as the put/call open interest ratio arrived at 1.11, indicating that profit taking or loss control may have been the motivation for Friday’s call activity.

Nvidia Corporation (NVDA)

With NVDA stock trading at all-time highs, a pullback was inevitable. Traders were handed an excuse to sell on Thursday, after rumors emerged that Advanced Micro Devices, Inc. (NASDAQ:AMD) signed an agreement to develop AI chips with Tesla. That rumor proved to be false, but the damage was already done.

What’s more, a report from analysts at Mizuho indicated that demand for Nvidia’s GPUs for cryptocurrency mining could cool off in December, potentially weighing on quarterly earnings projections — especially since cryptocurrency demand currently accounts for about 10% of Nvidia’s revenue.

As a result, NVDA dropped about 4.5% last week, dipping below key support at $180. Call traders also backed off sharply, with puts making up 51% of the more than 176,000 contracts traded on NVDA on Friday. What’s more, waning bullish sentiment has pushed NVDA’s October put/call OI ratio higher to 0.98 as speculators bet on an extended decline for the shares.

Apple Inc. (AAPL)

Apple just banked its worst weekly performance following a product launch in a decade. AAPL stock is now down about 6% from it’s Sept 12 iPhone announcement, and 7.4% for the month of September. Furthermore, additional losses could be in store this week following reports of short lines for the iPhone 8 around the world. Analysts are playing off signs of slack demand by predicting that most Apple customers are waiting for the iPhone X or ordering online instead of in store.

Regardless of the reason, AAPL stock is poised to test former support/resistance at $150 this week. A failure here puts the shares at risk of entering bear-market territory.

As for AAPL options, call volume slacked off on Friday, but bulls have yet to enter full retreat. Volume topped 922,000 contracts, nearly doubling Apple’s daily average. Calls made up an average 62% of the day’s take.

That said, pessimism is growing in the October options series, with the put/call OI ratio rising from it’s pre-iPhone announcement levels near 0.55 to its current perch at 0.68. In other words, call traders are taking profits, leading put OI to climb at a faster rate.

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

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