Thursday’s Vital Data: Apple, IBM and Canopy Growth Corp
U.S. stock futures are mixed this morning after equities suffered their fourth consecutive losing session on Wednesday. Death crosses are starting to form bolstering gloomy forecasts and shares of tech titan Apple (NASDAQ:AAPL) have officially entered bear country.
Ahead of the bell, futures on the Dow Jones Industrial Average are down 0.1% and S&P 500 futures are lower by 0.16%. Nasdaq-100 futures have added 0.04%.
In the options pits, put volume spiked sharply yesterday. Specifically, about 19.3 million calls and 23.1 million puts changed hands on the session.
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The increase put demand made waves over at the CBOE, where the single-session equity put/call volume ratio rose to 0.81 — a one-month high. The 10-day moving average ticked higher to 0.67.
Options trading was a mixed bag on Wednesday. Apple (NASDAQ:AAPL) saw renewed options interest after officially entering a bear market. IBM (NYSE:IBM) remains unable to recover after the recent acquisition of Red Hat (NASDAQ:RHT). Finally, Canopy Growth Corp (NYSE:CGC) shares are skidding after disappointing earnings.
Apple (AAPL)
Once upon a time, Apple stock was the epicenter of relative strength. Now it’s plagued by weakness and has officially fallen 20% from its highs meeting the Street’s definition of a bear market. The latest blow in the ongoing technical deterioration was this week’s breach of the oft-watched 200-day moving average.
A groundswell in volume accompanied the breakdown adding further urgency to the bearish signal.
On the options trading front, calls were more popular despite the stock’s slide. Apple was the one stock in the entire marketplace whose total contracts traded eclipsed the one million mark. By days end the tally grew to 1,019,489, with 57% of the total coming from calls.
Implied volatility is rising this week and now sits at 34% or the 70th percentile of its one-year range. Traders are pricing in daily moves of $4.06 or 2.2%. The elevated premium is making bull puts an attractive contrarian play for those looking to capitalize on a snap-back in the stock.
IBM
Uncertainty and downside pressure remain after IBM’s recent acquisition of Red Hat. The technology giant scored a snapback from deeply oversold conditions last week but has since begun sliding anew.
With the declining 50-day and 20-day moving averages looming overhead, it remains deep in bear territory suggesting rallies should be viewed with extreme skepticism.
Its 2018 year-to-date losses have grown to 22% with the entirety of the drop taking place over the past two months.
On the options trading front, traders came after puts with a vengeance. By day’s end, the total contracts traded lifted to 77,587 with puts accounting for 79% of the day’s take.
Implied volatility remains pumped at 29% or the 79th percentile of its one-year range. Traders are pricing in daily moves of $2.21 or 1.8%.
Canopy Growth Corp (CGC)
Canopy shares were walloped yesterday in response to lackluster earnings results. Investors were hoping that Canada’s newly legal recreational market would help boost earnings, but thus far its impact has been muted.
CGC finished the day down 10.9% on heavy volume, but the losses didn’t end there. The selling pressure has persisted overnight driving Canopy lower by another 2% in after-hours trading.
The daily trend is now officially pointing lower with prices submerged beneath a falling 50-day and 20-day moving average.
On the options trading front, puts slightly outpaced calls, accounting for 53% of the day’s take. Total contracts traded ended at 100,331 for the trading session.
Implied volatility has receded slightly after earnings, but not by much. It remains in the upper half of its one-year range at 87%.
As of this writing, Tyler Craig didn’t hold positions in any of the aforementioned securities. Want insightful education on how to trade? Check out his trading blog, Tales of a Technician.
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