Thursday’s Vital Data: Coca-Cola, Twitter and Intel

Stock Market

U.S. stock futures are trading higher this morning as traders attempt to extend the budding stock rally for the third day. With this week’s rebound into month end, traders succeed in paring October’s steep losses, if only slightly.

All eyes are on Apple (NASDAQ:AAPL) this evening to see if the king of tech can add further fuel to the market’s recovery attempts.

In early morning trading, futures on the Dow Jones Industrial Average are up 0.41% and S&P 500 futures are higher by 0.33%. Nasdaq-100 futures have added 0.28%.

In the options pits, the scale of calls and puts was perfectly balanced yesterday, even as overall volume remained elevated. Specifically, about 21.4 million calls and 21.3 million puts changed hands on the session.

Over at the CBOE, the single-session equity put/call volume ratio fell to 0.65 as the market rally dampened put demand. The 10-day moving average held its ground at 0.70.

Corporate earnings and the subsequent price reactions continued to hold options traders attention. Coca-Cola (NYSE:KO) call options soared in popularity following its earnings-induced price breakout. Twitter (NYSE:TWTR) and Intel (NASDAQ:INTC) continue to be in focus following their positive quarterly reports.

Let’s take a closer look:

Coca-Cola (KO)

Coca-Cola shares extended their post-earnings gains Wednesday, with many traders heading into the options market to place their bets. This week the soda king reported a solid quarter beating the Street’s earnings and revenue estimates. KO garnered earnings per share of 58 cents on revenue of $8.25 billion.

Strong growth in sales from its diet soda drink, Coca-Cola Zero Sugar as well as higher prices

On the options trading front, traders came after calls with conviction. Activity swelled to 402% of the average daily volume, with 103,118 total contracts traded. In an impressive one-sided onslaught, 89% of the trading came from call options.

With earnings now in the rear-view mirror, implied volatility is retreating to more normal levels. At 17% it now sits in the 31st percentile of its one-year range. The expected daily move for KO stock has now dwindled to 1%.

Twitter (TWTR)

The turnaround in Twitter continued Wednesday with its fifth up day in a row. Its third-quarter earnings lit a fire under the stock that bears have yet to extinguish.

This week’s gains have carried TWTR stock back above all major moving averages for the first time since July. Resistance looms large near $36, however, so some backing and filling may be in order here. Particularly given the hefty gains Twitter now needs to digest.

On the options trading front, calls continued their popularity dominance. Activity remained hot at 176% of the average daily volume, with 196,601 total contracts traded. Calls accounted for 75% of the total.

The post-earnings volatility crush has been on full display this week. Implied volatility now rests at 56% or the 43rd percentile and is pricing in daily moves of 3.5%.

Intel (INTC)

The post-earnings rally in chipmaker Intel finally faltered yesterday amid profit-taking near pivotal short-term resistance. Time will tell if this week’s strength can turn the five-month downtrend that has defined INTC stock. For now, it appears a retracement and nothing more.

As for the broader semiconductor sector, it remains in hot mess mode despite the two-day rally that buoyed the space into month end.

On the options trading front, calls dominated the trading session. Total activity came in at 118% of the average daily volume, with 158,686 total contracts traded. Calls contributed 75% to the day’s take.

Implied volatility has receded post-earnings but remains in the upper half of the one year range. At 36%, it’s at the 34th percentile and is pricing in daily moves of volatility crush has been on full display this week. Implied volatility now rests at 56% or the 43rd percentile and is pricing in daily moves of 2.2%

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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