Tuesday’s Vital Data: Activision, Amarin and Apple

Stock Market

U.S. stock futures are trading lower as election day takes center stage. Speculation on the outcome is heading into overdrive, but the current consensus is for the Democrats to gain control of the House and split Congress.

Ahead of the bell, futures on the Dow Jones Industrial Average are down 0.11% and S&P 500 futures are lower by 0.14%. Nasdaq-100 futures have shed 0.22%.

In the options pits, volume plunged yesterday as market volatility subsided. Specifically, about 15.7 million calls and 14.2 million puts changed hands on the session.

The lack of urgency in put buying was apparent at the CBOE, where the single-session equity put/call volume fell to 0.61. The 10-day moving average held its ground at 0.67.

Options activity was a mixed bag on Monday. Traders slammed shares of Activision Blizzard (NASDAQ:ATVI) after its unveiling of its new “Diablo Immortal” mobile game had players in an uproar. Amarin (NASDAQ:AMRN) options were active ahead of their Nov. 10 release of additional details on their fish-oil-based drug, Vascepa. Finally, Apple (NASDAQ:AAPL) fell on reports that it halted plans to increase production following disappointing demand for the iPhone XR.

Let’s take a closer look:

Activision Blizzard (ATVI)

Activision Blizzard shares slid 7% Monday following outrage as players learned its new “Diablo Immortal” game would be released on mobile devices only and not PC. This was not what its hardcore fanbase was expecting and resulted in a flurry of negative comments across social media channels.

The selling pressure comes as investors gear up for earnings Thursday night. ATVI stock is now down 31% since peaking early last month at $84.68.

On the options trading front, calls traded heavy on the day. Activity swelled to 254% of the average daily volume, with 69,736 total contracts traded. 78% of the trading came from call options alone.

With earnings coming around the corner, implied volatility is understandably lofty. At 52%, the implied vol sits at the 100th percentile of the one-year range. The market is pricing in a $4.50 move for Activision’s earnings reaction which translates into a 7% jump.

Amarin (AMRN)

Irish biotech company, Amarin saw a flood of call demand on continued speculation over the potential for its fish oil-based drug, Vascepa. September’s release of positive results surrounding the drug’s ability to treat high triglyceride levels is what placed AMRN stock on the map with an overnight pole vault from $3 to $12.

Since then, the stock has continued its moonshot, and many traders are taking to the options market to place their bets.

On the options trading front, calls were the hot ticket. Activity ramped to 146% of the average daily volume, with 68,378 total contracts traded. An impressive 86% of the tally came from calls.

Though implied volatility imploded after the company’s September release of the study results, it remains extremely high at 181%. On Nov. 10 Amarin is expected to release further information from its study at the 2018 Scientific Sessions of the American Heart Association. Look for its next outsized gap to strike then.

Apple (AAPL)

Apple landed atop our “most-actives” list again yesterday. The latest negative news for the tech titan arrived via the Nikkei Asian Review which reported: “Apple has signaled disappointing demand for the new iPhone XR, telling its top smartphone assemblers Foxconn and Pegatron to halt plans for additional production lines dedicated to the relatively cost-effective model that hit shelves in late October, sources say.”

AAPL shares fell as much as 4.2% before paring losses into the closing bell. Combined with the earnings swoon, the stock has been taken out at the knees.

On the options trading front, calls slightly outpaced puts on the day. Activity remained elevated at 144% of the average daily volume, with 898,215 total contracts traded. Calls accounted for 58% of the day’s take.

Implied volatility remains aloft at 32% or the 61st percentile of its one-year range. The market is pricing in daily moves of 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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