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Tuesday’s Vital Data: Twitter, General Electric and Tesla

Joseph Hargett

U.S. stock futures are trending higher this morning. Wall Street appears to have shaken off troubles coming out of Turkey, after the country’s central bank pledged to provide “all the liquidity” its financial institutions needed. Turkey’s lyra has plunged by more than a third in the past two weeks.

Against this backdrop, futures on the Dow Jones Industrial Average are up 0.37%, while S&P 500 futures have risen 0.35%. Nasdaq-100 futures, meanwhile, have added 0.45%.

In the options pits, volume remained below average on Monday as puts gained popularity. About 16.6 million calls and 16.1 million puts changed hands on the session. Over on the CBOE, the single-session equity put/call volume ratio retreated from Monday’s lofty reading of 0.70 to arrive at 0.64. The 10-day moving average ticked lower to 0.63.

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Options traders took aim at Twitter (NYSE:TWTR) calls following bullish remarks from Citron Research. Elsewhere, General Electric (NYSE:GE) calls were also popular after the company said it was mulling the sale of its power conversion unit. Finally, Tesla (NASDAQ:TSLA) remains a hot topic as CEO Elon Musk continues to pursue taking the company private.

Let’s take a closer look:

Tuesday’s Vital Options Data: Twitter, General Electric and Tesla

Twitter (TWTR)

Twitter sits alone with no direct competitor, according to Citron Research. That’s quite a statement given that Wall Street marks Facebook (NASDAQ:FB) and Snap (NYSE:SNAP) among key social media companies. However, that’s exactly what Citron’s Andrew Left wrote on Monday.

“While many view Twitter solely as the preferred form of communication for the POTUS, it has become all things media and an irreplaceable part of the global dialogue,” Left said. “While TWTR is commonly bucketed with FB and SNAP, Citron believes TWTR actually sits alone, with no direct competitor in the exchange of thoughts.”

TWTR stock jumped about 2.5% following Left’s note, and options traders piled into calls. Volume rose to 238,000 contracts, with calls snapping up 80% of the day’s take. TWTR stock may have taken quite a plunge last month, but TWTR options traders remain solidly bullish.

In fact, this optimism has spilled over in the September series. Currently, the September put/call open interest ratio rests at a lowly reading of 0.54. In short, options traders are holding nearly twice as many TWTR calls as puts in the back month series.

General Electric (GE)

GE stock slid roughly 2.5% on Monday following news the company was mulling the sale of its power conversion unit for $1.5 billion. The problem is that GE paid $3.2 billion for the unit formerly known as Converteam back in 2011 — a significant valuation hit. Credit Suisse Group AG is working with GE on selling the unit, which could start as early as next month.

GE options traders appeared to take the news better than stock investors. Volume rose to 234,000 contracts, with calls making up 71% of the day’s take. However, the September put/call OI ratio rests at 0.84, a reading that is far from bullish. Most likely, these call traders are looking at some form of arbitrage surrounding GE’s potential power conversion sale.

Tesla (TSLA)

Tesla probably won’t be leaving the financial media headlines any time soon. On Monday, CEO Elon Musk further pushed the idea of taking the company private by listing buyout firm Silver Lake and investment bank Goldman Sachs as financial advisers on the deal.

However, reports suggest that Silver Lake is not participating in any official capacity (i.e., they’re not getting paid). Neither Goldman or Silver Lake have commented on the news.

Options traders remained divided on TSLA stock. Volume on Monday came in at 204,000 contracts, which is well below last week’s surge when the news first broke. Calls only managed 58% of the day’s take.

In fact, puts are the darlings of TSLA’s options backdrop. Specifically, the September put/call OI ratio has soared to an impressive reading of 2.78, with puts nearly three times as popular as puts in the back month series. What’s more, the deep out-of-the-money September $100 and $50 strikes have garnered the most attention.

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

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