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Tuesday’s Vital Data: Aurora Cannabis, Roku and Apple

Tyler Craig

U.S. stock futures are trading higher this morning. The gains come as traders gear up for tonight’s State of the Union Address from the President.

Tuesday's Vital Data: Aurora Cannabis, Roku and Apple

Ahead of the bell, futures on the Dow Jones Industrial Average are up 0.39% and S&P 500 futures are higher by 0.21%. Nasdaq-100 futures have added 0.41%.

In the options pits, the utter lack of any panic whatsoever drove put demand into the ground. On a broader note, overall volume levels came up well short of average. Specifically, only 15.6 million calls and 12.6 million puts changed hands on the session.

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There was little change at the CBOE, where the single-session equity put/call volume ratio stayed pat at 0.6. The 10-day moving average also held its ground at 0.63.

Call options dominated among today’s crop of notables. Aurora Cannabis (NYSE:ACB) saw renewed options interest amid continued excitement over marijuana stocks. Roku (NASDAQ:ROKU) soared as much as 12% on a positive news report. Finally, Apple (NASDAQ:AAPL) added to its post-earnings gains with a solid 2.8% bump.

Let’s take a closer look:

Aurora Cannabis (ACB)

Marijuana stocks have been making frequent appearances atop the most-actives list this year. The groundswell in activity shouldn’t be surprising given the industry’s meteoric rise in 2019. On Monday, one of the smaller companies in the space made a rare showing on our list: Aurora Cannabis.

The news was light on Monday, so I’m chalking up the elevated activity as a technical driven event. ACB stock scored a price breakout to a new three-month high. The 8.6% rally was accompanied by huge volume. In fact, the 67.58 million shares that changed hands marks the largest volume session for ACB in history.

On the options trading front, traders came after calls with a vengeance. Activity swelled to 445% of the average daily volume, with 125,692 total contracts traded. 90% of the trading came from call options alone.

The increased demand drove implied volatility higher on the day to 103%, placing it near a two-month high.


Roku (ROKU)

Roku shares rallied some 12% yesterday before paring the gains to 4.9% by the closing bell. According to Barron’s, the source of the excitement was news that Comcast (NASDAQ:CMCSA) would be focusing on Roku and not Apple TV “to spread streaming TV to its cable subscribers.”

While news hounds are clinging to that narrative, chart watchers are pointing to ROKU stock’s clear price breakout as the cause for the excitement. The rally allowed the stock to clear the 200-day moving average for the first time since last November, signaling the next step in its recovery attempt.

The euphoria is continuing this morning, with ROKU up 2.4% premarket.

On the options trading front, calls dominated the session. Total activity climbed to 202% of the average daily volume, with 91,694 total contracts traded. Calls contributed 67% to the session’s tally.

Implied volatility inched higher on the day to 78%, placing it at the 45th percentile of its one-year range. Premiums are pricing in daily moves of $2.32, or 4.9%.

Apple (AAPL)

The post-earnings euphoria continued on Monday, pushing Apple shares to a new seven-week high. The continued strength bolsters the argument that the worst is over and the bottom is in for AAPL stock.

Apple’s performance surrounding earnings season serves as a microcosm for the entire market. The shares were whacked weeks ahead of its report when the company pre-announced revenue numbers that fell short of expectations. But then, when the actual data was released, the stock rallied amid relief that the forward guidance wasn’t as bad as expected.

Many stocks that were brought low ahead of Q1 earnings have surged afterward. This bullish behavior continues to bolster the market recovery.

On the options trading front, calls outpaced puts by a modest margin. Activity fell short, coming in at 94% of the average daily volume, with 535,511 total contracts traded. 61% of the total came from calls.

The after-earnings implied volatility drop persisted, driving the reading to 25%, which is the 30th percentile of its one-year range. Options are now pricing in daily moves of 1.6%.

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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