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Thursday’s Vital Data: Apache, Halliburton and Micron

Tyler Craig

U.S. stock futures are trading higher this morning, erasing Tuesday’s slight losses.

Ahead of the bell, futures on the Dow Jones Industrial Average are up 0.36% and S&P 500 futures are higher by 0.36%. Nasdaq-100 futures have added 0.47%.

Calm settled on the options pits yesterday with calls leading the charge. Overall volume levels fell to its lowest level in weeks, particularly on the put side of the aisle. By day’s end, some 15.5 million calls and 14 million puts changed hands.

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Despite the sluggish trading session, the CBOE single-session equity put/call volume ratio rose sharply to 0.77 — a two-week high. Meanwhile, the 10-day moving average moved higher to 0.66.

Options traders zeroed in on energy stocks. Apache Corporation (NYSE:APA) and Halliburton (NYSE:HAL) both reversed lower, showing a continuation of their downtrends. Elsewhere, Micron (NASDAQ:MU) fell amid widespread profit-taking in the semiconductor industry.

Let’s take a closer look:

Thursday's Vital Data: Apache, Halliburton and Micron options trading

Apache (APA)

Apache shares made a rare appearance on top of the most-active options leaderboard Tuesday. The Houston-based petroleum company slid 2.39% on its second-highest volume day of the year. Just under 10.1 million, shares changed hands on the session.

The drop pushed APA stock back below its 20-day moving average, reaffirming its overall downtrend. Bears shouldn’t get too complacent, however. The stock has already erased yesterday’s losses in premarket trading. It’s currently trading up 2.50% on the heels of a 4% jump in oil prices.

On the options trading front, the groundswell in volume was equally balanced between calls and puts. Total activity exploded to 2,717% of the average daily volume, with 150,841 contracts traded.

Implied volatility ticked slightly higher on the day to 46%, placing it at the 47th percentile of its one-year range. Premiums are pricing in daily moves of 81 cents or 2.9%.

Halliburton (HAL)

The pain in energy stocks wasn’t isolated to Apache. Bears also raided Halliburton shares, driving the oil services giant close to a new 52-week low at $21.07. The 4.6% drubbing saw above-average volume with 18.4 million shares changing hands. Volume patterns have been extremely bearish for two months with distribution days littering the landscape.

Relief is coming this morning with the stock up 2.50% premarket. Unfortunately, with HAL trending lower across all time frames, it’s going to take more than a mild up-gap to right the ship.

On the options trading front, traders aggressively chased put options. Total activity roared to 368% of the average daily volume, with 144,181 contracts traded. A whopping 93% of the trading came from put options alone.

Implied volatility remains elevated at 45% or the 64th percentile of its one-year range. Premium sellers will be happy to note this is close to the highest level of the year, suggesting short premium strategies are paying handsomely. The expected daily move is 60 cents or 2.8%.

Micron Technology (MU)

Semiconductor stocks weighed on the Nasdaq yesterday with Micron Technology shares leading to the downside. MU stock dropped 5.4% on above-average volume. The news was light, so I’m chalking up the drop as a technical-driven move signaling a continuation of the downtrend that emerged in May.

Until the stock can break back above short-term resistance at $36, bears hold the upper hand. The next earnings report looms on June 25.

On the options trading front, the day’s drubbing lit a fire under put demand. Activity climbed to 157% of the average daily volume, with 182,375 total contracts traded; 62% of the trading came from put options alone.

Implied volatility popped to a new three-month high at 53%. That places it at the 52nd percentile of its one-year range. Traders are now pricing in daily moves of $1.11 or 3.4%.

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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