U.S. stock futures are trading mixed this morning as investors pause to digest yesterday’s strong gains
Heading into the open, futures on the Dow Jones Industrial Average are down 0.15% and S&P 500 futures are higher by 0.14%. Nasdaq-100 futures have added 0.28%.
In the options pits, put volume receded yesterday as last week’s pessimism gave way to aggressive buying. Overall volume held steady around average levels. Specifically, about 18.5 million calls and 15.1 million puts changed hands on the session.
The return of call demand slammed the CBOE single-session equity put/call volume ratio down to 0.57 — a two-week low. Meanwhile, the 10-day moving average stayed pat at 0.65.
Here are three popular stocks who landed atop the options activity leaderboard on Monday. Massive turbulence struck Boeing (NYSE:BA) shares after a tragic crash over the weekend involving one of its aircraft. Apple (NASDAQ:AAPL) scored an upside breakout, finally ending its multi-week consolidation pattern. Nvidia (NASDAQ:NVDA) rallied 6% after announcing the $6.9 billion acquisition of Mellanox (NASDAQ:MLNX).
Let’s take a closer look:
Boeing shares experienced one of their most volatile trading sessions in ages amid fallout from a deadly crash involving its top-selling 737 MAX jet.
In a chaotic session, BA stock opened down 12% only to see buyers immediately emerge and push the stock higher throughout the day. By the closing bell, Boeing’s losses were pared to just over 5%.
The strong upside reversal was about as good an outcome as shareholders could have hoped for. Multiple support zones were tested at the open, and the rally proves bulls maintain control of the aerospace juggernaut.
On the options trading front, calls outpaced puts by a slight margin despite the early morning thrashing. The total contracts traded ramped to 386,579 making its options the third most actively traded in the market. Calls accounted for 52% of the day’s tally driving BA to end with a put/call ratio of 0.93.
The surge in uncertainty lit a fire under implied volatility, driving it to a two-month high of 34%. That places it at the 47th percentile of its one-year range. Premiums are now pricing in daily moves of $8.58, or 2.1%.
Apple finally woke from its slumber, scoring a robust breakout. High volume accompanied the jump, suggesting institutions were on the move and net buyers of the tech titan. This adds legitimacy to the resistance breach and increases the likelihood that we see continued upside to the next resistance zone at $185.
The technology sector is one of the strongest in the market and Apple is once again adopting a leading role.
The uptick in options trading made AAPL the second most active stock on the day. Traders were hungry for calls, driving total options volume to 556,717. About 69% of the sum originated with call options.
Monday’s price surge did little to lift implied volatility. Complacency ruled the day keeping the reading at 19%. That places it at the 15th percentile of its one-year range. Premiums remain cheap, pricing in daily moves of $2.16 or 1.2%.
Merger Monday lived up to its namesake yesterday with news that Nvidia was purchasing the Israeli company Mellanox for $6.9 billion. It marks the graphics-chip company’s largest acquisition ever and could spark a return to growth for the recently beaten company.
Investors expressed their optimism on the deal by driving NVDA stock 7.6% higher on the day. It’s worth noting this is somewhat atypical. Usually, the acquiring company initially falls when the news hits the wires. With the surge, NVDA is fast approaching critical resistance at $165. That is the level to watch because if it breaks, the stock’s four-month basing pattern will finally be completed.
On the options trading front, calls dominated the session, accounting for 61% of the total. The number of contracts swelled to 267,245 by the close and the put/call ratio ending at 0.65.
Implied volatility fell to 37%, placing it at the 28th percentile of its one-year range. Premiums are pricing in daily moves of $3.79, or 2.4%.
As of this writing, Tyler Craig held bullish positions in BA. Check out his recently released Bear Market Survival Guide to learn how to defend your portfolio against market volatility.