Monday’s Vital Data: Starbucks, Apple and Qualcomm

Stock Market

U.S. stock futures are trading mixed this morning as traders turn their focus to the mid-term elections on Tuesday.

Heading into the open, futures on the Dow Jones Industrial Average are down 0.06% and S&P 500 futures are higher by 0.01%. Nasdaq-100 futures have shed 0.25%.

In the options pits, call and put volume were equally popular while overall volume levels finished well above average. Specifically, about 25.5 million calls and 25.2 million puts changed hands on the session.

As for the CBOE, the single-session equity put/call volume ratio rocketed back up to 0.68. The 10-day moving average furthered its slide to 0.66.

Earnings continue to be in focus for options traders. Starbucks (NASDAQ:SBUX) exploded to a record high after reporting strong comp sales gains in the U.S. Apple (NASDAQ:AAPL) suffered its worst down day since 2014 after lackluster guidance for Q4. Finally, Qualcomm (NASDAQ:QCOM) options were active ahead of this week’s earnings release.

Let’s take a closer look:

Starbucks (SBUX)

Starbucks shares were flying high on Friday after a robust earnings release ushered the stock to a new record high. The company reported earnings per share of 62 cents on revenue of $6.3 billion. Both measures beat analyst estimates.

One particular bright spot on the report was comparable sales gains of 4% in the U.S.

Chart watchers are cheering Friday’s performance because SBUX finally broke out of a three-year trading range. Its intraday high of $65.68 is a new record and may well bring new buyers into the fray.

On the options trading front, traders understandably came after calls with a vengeance. Activity swelled to 389% of the average daily volume, with 150,515 total contracts traded. 62% of the total fell on the call side.

With earnings now in the rearview mirror, implied volatility is retreating. It now sits at 25% or the 61st percentile of its one-year range. The expected daily moves are now at 1.6%

Apple (AAPL)

The titan of tech was brought low on Friday following an earnings report that left investors dissatisfied. Though AAPL bested the Street’s estimates on the top and bottom line, it’s lackluster forecast and announcement that it will stop providing unit-sales figures for the iPhone sent its share price skidding.

By day’s end, Apple fell 6.6% which is its worst one-day percentage drop since 2014.

Bank of America Merrill Lynch downgraded the stock following Friday’s release and this morning, Rosenblatt Securities is piling on with a downgrade of their own today shifting their rating from buy to neutral.

On the options trading front, calls slightly outpaced puts on the day. Activity remained lofty at 275% of the average daily volume, with 1,610,334 total contracts traded. Calls accounted for 56% of the day’s take.

Implied volatility is sliding back to more normal levels. It now stands at 32% or the 62nd percentile of its one-year range. Traders are pricing in daily moves of 2%.

Qualcomm (QCOM)

Semiconductor giant, Qualcomm, is slated for its earnings report on Wednesday, after the close. The Street expects the chipmaker to earn 82 cents per share on revenue of $5.53 billion.

QCOM shares have suffered during the recent tech wreck, falling 17%. The stock shattered the 20-day and 50-day moving average along the way. Shareholders are hoping this week’s earnings report will arrest the decline.

On the options trading front, increased activity shows traders are already jockeying for positions. Call and put trading was balanced on Friday, but activity swelled to 227% of the average daily volume, with 84,931 total contracts traded. Puts accounted for 51% of the total.

Implied volatility has rallied ahead of the event and is now perched at 41% or the 66th percentile of its one-year range. The expected earnings move is $3.94 which translates into a 6.2% range.

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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