Wednesday Vital Data: FedEx, Advanced Micro Devices and Nvidia

Stock Market

U.S. stock futures are circling unchanged this morning as traders hit the pause button ahead of today’s Fed announcement.

Ahead of the bell, futures on the Dow Jones Industrial Average are down 0.05% and S&P 500 futures are lower by 0.06%. Nasdaq-100 futures have lost 0.01%.

The only change in the options pits was a slight uptick in put volume, while call activity remained similar to Monday. Specifically, about 18.1 million calls and 15.4 million puts changed hands on the session.

The push into puts was felt at the CBOE, where the single-session equity put/call volume ratio popped to 0.58. Meanwhile, the 10-day moving average continued its decline, sinking below 0.63.

Options activity was particularly heavy in the following three stocks: FedEx (NYSE:FDX), Advanced Micro Devices (NASDAQ:AMD) and Nvidia (NASDAQ:NVDA).

Let’s take a closer look:

FedEx (FDX)

The global growth woes that weighed on FedEx last December have returned to the fore. Last night the package delivery behemoth reported earnings that missed estimates due to a slowing global economy. FDX stock is currently down 6.4% premarket.

Earnings per share came in at $3.03 on revenue of $17.01 billion. According to Refinitiv, analysts were expecting earnings of $3.11 on $17.67 billion in revenue.

The down gap is upending what was already a tepid recovery attempt. it had gained some 20% since bottoming in December. This morning’s plunge will usher FDX stock back below all its major moving averages, placing bears in total control. Poor fundamentals coupled with terrible technicals is a toxic brew that will likely weigh on FedEx over the coming quarter.

On the options trading front, the margin between call and put volumes narrowed ahead of last night’s report. Activity ballooned to 658% of the average daily volume, with 95,646 total contracts traded. Calls accounted for 53% of the tally.

The expected earnings move based on option premiums was $8.87, or 4.9%. That makes this morning’s 6.11% plunge larger than anticipated. Traders swinging long volatility trades like straddles and strangles should awake to winning positions here.

Advanced Micro Devices (AMD)

Advanced Micro Devices blew the doors out on Tuesday by rallying 11.8% after news broke that the company’s GPUs are being used in Alphabet‘s (NASDAQ:GOOG, NASDAQ:GOOGL) new gaming platform, Stadia. It will run on Google Cloud and allows users to stream video games on a wide array of devices.

Momentum traders have long loved AMD for its high beta and penchant for monster moves. Yesterday was a prime example of the outsized profits that await to those on the right side of one of these big rallies. With the big-league breakout, the stock now sits at fresh five-month highs and has room to run to the next resistance zone at $28.50.

Traders took to the options mart to shop for profits. Calls ruled the day, outdistancing puts by a wide margin. Activity swelled to 356% of the average daily volume, with 709,392 total contracts traded. 67% of the trading came from call options alone.

The demand surge lifted implied volatility to 54%, placing it at the 27th percentile of its one-year range. Premiums are now pricing in daily moves of 88 cents, or 3.4%.

Nvidia (NVDA)

Nvidia shares broke to fresh four-month highs on optimism surrounding new partnerships. Tuesday’s high volume 4% pop came as the company began its annual convention and revealed details about Amazon Web Services using Nvidia’s T4 chips.

The breakout should undoubtedly be exciting chart watchers. NVDA has now completed its months-long bottoming process. The 20-day and 50-day moving averages have both turned higher suggesting buyers have wrested back control of the short and intermediate-term trends. Additionally, a price void looms overhead in the form of November’s earnings gap. This should make it easier for NVDA to see upside followthrough.

On the options trading front, calls outpaced puts on the session. Activity grew to 146% of the average daily volume, with 278,799 total contracts traded. 64% of the sum came from the call side of the equation.

Implied volatility sits at 37%, which places it at the 27th percentile of its one-year range. Premiums are pricing in daily moves of $4.09 or 2.3%.

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.

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