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Thursday’s Vital Data: Beyond Meat, Facebook and Boeing

Tyler Craig

U.S. stock futures are gunning for a quiet open which stands in stark contrast to the ruckus in Washington. Yesterday’s successful defense of support and the 50-day moving average in the S&P 500 is emboldening buyers and bringing calm to the markets.

Thursday's Vital Data: Beyond Meat, Facebook and Boeing

Source: Shutterstock

In early morning trading, futures on the Dow Jones Industrial Average are up 0.16%, and S&P 500 futures are higher by 0.13%. Nasdaq-100 futures have added 0.05%.

Activity in the options pit fell back from Tuesday’s lofty levels with call volume returning to the lead. By day’s end, some 17.3 million calls and 15.8 million put changed hands. Market bulls should cheer the return to normalcy as it bodes well for the likelihood of a continuation to yesterday’s rally.

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The CBOE single-session equity put/call volume ratio slipped back to 0.67 and mirrored the drop in put demand seen in the pits. Meanwhile, the 10-day moving average lifted to 0.65.

Options trading was rocking in a handful of stocks yesterday. Beyond Meat (NYSE:BYND) shares are screaming higher this morning after news hit that restaurant king, McDonald’s (NYSE:MCD) will soon test one of their plant-based burgers. Facebook (NASDAQ:FB) saw heavy call buying during its strong rebound. Finally, Boeing (NYSE:BA) attempted to break out to a six-month high amid heavy options trading.

Let’s take a closer look:

options trading chart

Beyond Meat (BYND)

Beyond Meat shares are skyrocketing this morning on news that McDonald’s is testing the company’s plant-based burger in 28 restaurants in Canada. The 12-week trial begins on Sept. 30 and will gauge consumer appetites for a plant-lettuce-tomato burger dubbed P.L.T.

Hungry traders are bidding up the Los Angeles-based company 16%, reversing much of this week’s earlier losses. The rally couldn’t have come at a better time because BYND stock was testing a key support threshold. Its once red-hot trend has cooled, and BYND is now stuck in a trading range beneath both the 50-day and 20-day moving averages. This morning’s gap will test overhead resistance and determine whether bulls are powerful enough to push outside of the range.

Source: Thinkorswim

On the options trading front, traders favored puts yesterday. Activity swelled to 152% of the average daily volume, with 113,194 total contracts traded; 60% of the trading came from put options alone.

This week’s descent is dragging implied volatility off of its recent lows. Thus far, the reading has lifted to 77%. Suffice it to say, there’s plenty of premium available for options sellers.

Facebook (FB)

Facebook followed the example of the tech sector and scored a friendly bullish hammer candle that saved it from what could have been a nasty support break. With the uptick in volume, FB stock also scored an accumulation day, which adds further legitimacy to the rally. Approximately 18.3 million shares traded on the session.

Source: ThinkorSwim

Noteworthy news was nonexistent for the social media titan, so I’m chalking up its move as a byproduct of broader market trends. As for trade ideas, it’s hard to have confidence in bullish plays until FB can climb back above the 50-day moving average and resistance at $191. Until then, this rally is suspect.

On the options trading front, the upside reversal sparked support for call options. Total activity zipped to 139% of the average daily volume, with 251,341 contracts traded. Calls accounted for 65% of the take.

Implied volatility dipped to 30% landing it at the 26th percentile of its one-year range. Premiums are pricing in daily moves of $3.43 or 1.9%.


Boeing (BA)

Do you know who is doing a splendid job of ignoring the recent impeachment drama? Boeing. Shares of the aerospace juggernaut seem to have turned a corner and are pointing to higher prices. Yesterday saw BA stock push to a six-month high on a breakout attempt.

From a price action perspective, there’s a lot to like here. It’s cruising higher above a rising 20-day, 50-day and 200-day moving average. Ever since bottoming early last month, dips have been shallow and all breakouts have been chased. Volume patterns are almost uniformly bullish with a spate of accumulation days along the way.

Source: ThinkorSwim

The optimism surrounding Wednesday’s breakout attempt was apparent in the options pits. Calls were the hot ticket and outpaced puts by about two to one. Total activity increased to 130% of the average daily volume, with 111,759 contracts traded.

Fear remains extremely low as reflected by the implied volatility which sits at 28% or only the 17th percentile of its one-year range. Premiums are baking in daily moves of $6.70 or 1.7%. Bull call spreads offer a cheap upside bet if you think the good times continue.

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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