U.S. stock futures are plunging this morning on the heels of another Trump tweet. This time the U.S. President aimed at Mexico, threatening a 5% tariff on all imports from the country starting on June 10.
Heading into the open, futures on the Dow Jones Industrial Average are down 1.02%, and S&P 500 futures are lower by 1.07%. Nasdaq-100 futures have lost 1.28%.
In the options pits, call volume eked out put volume while overall levels settled near average levels. Specifically, about 16 million calls and 15.6 million puts changed hands on the session.
Meanwhile, over at the CBOE, the single-session equity put/call volume ratio ticked back up to 0.64 but remains in the middle of its 2019 range. The 10-day moving average continued sliding and finished the day at 0.69.
Let’s take a closer look:
Verizon shares had been holding firm in the face of the recent trade war drama. Until UBS entered the equation, that is. The investment bank sent VZ stock skidding yesterday after one of its analysts slashed his rating to neutral. By day’s end, the stock had fallen 2.32%, and it’s down another 2.34% in early morning trading.
The drop ushered Verizon shares to the 200-day moving average. While the initial test held, the premarket messiness is sending VZ well below the 200-day in what could become a nasty breakdown. Further downside could carry the stock down to the next major support area at $53. One silver lining of the descent is the boosting of Verizon’s dividend yield to 4.34%.
On the options trading front, calls outpaced puts despite the day’s drubbing. Total activity climbed to 336% of the average daily volume, with 103,835 contracts traded; 63% of the trading came from call options alone.
Implied volatility cruised higher on the day to 21%, placing it at the 33rd percentile of its one-year range. Premiums are now pricing in daily moves of 75 cents or 1.3%.
Uber’s first official earnings report as a public company took place Thursday after the bell and options trading was hyped ahead of the event. For the quarter, UBER lost $1.01 billion on revenue of $3.10 billion. Both measures were mostly in-line with analyst estimates. Nonetheless, losing a billion bucks is a mighty impressive feat.
Not that the Street is worried. UBER stock is up 2% premarket to $40.57. Aside from the sharp second-day drop, shares of the ubiquitous ride-hailing company have traded in a tight range since their public debut. With only three weeks of price action thus far, there’s little action to chew on. For now, I suggest marking the high and low of its range ($45 and $36). A breakout in either direction could finally spur a trend worth trading.
On the options trading front, traders favored calls ahead of earnings. Activity swelled to 330% of the average daily volume, with 136,591 total contracts traded. Calls claimed 59% of the day’s take.
The expected move into earnings was $2.82 or 7.1%, so this morning’s 2% pop is a nothing-burger that should bring big profits to traders shorting volatility ahead of the event.
Beyond Meant (BYND)
Beyond Meat powered to a new record high of $105.25 before retreating to close at $98.59 on Thursday. That brings the official tally of its post-IPO gains to 114%. And that’s in less than one month. The first hurdle to its nascent uptrend looms on June 6, where the provider of plant-based meat alternatives will release its first earnings report. We shall soon see if its growth this quarter supports such a hefty price gain.
On the options trading front, traders favored calls on the session. Total activity jumped to 321% of the average daily volume, with 131,293 contracts traded. Calls claimed 57% of the session’s sum.
The increased demand drove implied volatility higher on the day to 113%. With earnings fast approaching, expect volatility to remain elevated over the coming week.
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.