Monday’s Vital Data: Aurora Cannabis, Oracle and Microsoft

Stock Market

U.S. stock futures are trading mixed in early morning trading. Pre-market weakness in Boeing (NYSE:BA) is weighing on the Dow Jones Industrial Average, while the other major U.S. Indexes are circling unchanged.

The Dow is down 0.19% and S&P 500 futures are higher by 0.04%. Nasdaq-100 futures have shed 0.02%.

Options expiration lit a fire under trading activity on Friday, with call volume winning the day by a large margin. Specifically, about 23.4 million calls and 18.4 million puts changed hands on the session.

The call surge slammed the CBOE single-session equity put/call volume ratio down to 0.57 – roughly the middle of its 2019 range. Meanwhile, the 10-day moving average once again remained sticky at 0.65.

Here were three stocks that commanded the attention of call lovers. Aurora Cannabis (NYSE:ACB) tacked on additional gains to its recent Peltz-inspired breakout. Oracle (NYSE:ORCL) swooned and then soared after reporting earnings. Finally, Microsoft (NASDAQ:MSFT) was flooded with activity as it rocketed to a new record high.

Let’s take a closer look:

Aurora Cannabis (ACB)

Recent news that Aurora Cannabis nabbed Nelson Peltz as a strategic advisor continues to benefit its stock price. ACB shares rallied another 6.9% on Friday amid optimism that the billionaire activist investor will help accelerate the company’s expansion.

If its entrance into the new year is any indication, 2019 is setting up to be a banner year. ACB stock is already up 93% year-to-date, and its price action has been tremendously healthy.

While the stock could do with some digestion after such a meteoric run over the past week, any dips should prove buyable.

On the options trading front, traders came after calls with a vengeance. Activity ballooned to 305% of the average daily volume, with 167,036 total contracts traded. An impressive 81% of the tally came from call options alone, showing just how dominating bulls were on Friday.

Implied volatility remained subdued, hovering at 75% which is near the lower end of its range.

Oracle (ORCL)

Oracle shares saw a volatile session after reporting earnings that surpassed the Street’s estimates. For the third quarter, the tech giant raked in earnings of 87 cents per share on $9.61 billion in revenue. The EPS metric beat expectations by 3 cents while revenue essentially met them.

Shareholders will be happy to note the company decided to increase their quarterly dividend payouts from 19 cents to 26 cents.

ORCL gapped lower on the day, but buyers emerged to bid the stock back to unchanged on the day. The rapid upside reversal proves buyers’ willingness to defend the uptrend and should bode well for the stock going forward.

On the options trading front, Oracle was the second most active stock in the market. Activity climbed to 522% of the average daily volume, with 119,866 total contracts traded. Calls accounted for 61% of the total.

The post-earnings volatility crush was particularly potent, with ORCL ending essentially unchanged on the day. Implied volatility fell to 18%, placing it at the 6th percentile of its one-year range. Premiums are now pricing in daily moves of 61 cents, or 1.2% per day.

Microsoft (MSFT)

The fourth-quarter beatdown in Microsoft is all but a distant memory. On Friday, the sultan of software notched a new closing high at $115.91. It’s also on a six-day winning streak. Volume surged to 54.6 million shares which is roughly double the daily average.

With the breakout, MSFT stock is firmly positioned for more gains. It’s effectively spent the past six months in pause mode. Consider the multi-month base a sound foundation for MSFT to build its next bull run on.

Not surprisingly, the burst to record highs buoyed up options trading with calls leading the way. Activity ramped to 214% of the average daily volume, with 277,248 total contracts traded. Calls added 65% to the sum.

The increased demand drove implied volatility slightly higher on the day to 18%. Still, it remains at a lowly 3rd percentile of its one-year range, so fear and uncertainty has all but abandoned MSFT stock. Premiums are now baking in daily moves of $1.34 or 1.2%.

As of this writing, Tyler Craig didn’t hold a position in any of the aforementioned securities. Check out his recently released Bear Market Survival Guide to learn how to defend your portfolio against market volatility.

Products You May Like

Leave a Reply

Your email address will not be published. Required fields are marked *