U.S. stock futures are trading higher this morning in a continuation of Friday’s strength.
Heading into the open, futures on the Dow Jones Industrial Average are up 0.5% and S&P 500 futures are higher by 0.42%. Nasdaq Composite futures have added 0.51%.
Bulls ran the tables in the options pits on Friday, with calls outpacing puts by a wide margin. Overall volume pushed above average levels with approximately 22.5 million calls, and 17.2 million puts trading on the day.
The enthusiasm spilled into the CBOE Volatility Index (VIX) as well, with the single-session equity put/call volume ratio plunging to 0.56 — a two-week low. Meanwhile, the 10-day moving average ended near 0.66.
Options traders once again aimed at companies posting quarterly earnings, including Intel (NASDAQ:INTC), Tesla (NASDAQ:TSLA) and Amazon (NASDAQ:AMZN), among others.
Let’s take a closer look.
Intel (INTC)
Source: ThinkorSwim
If you’re looking for a culprit to Friday’s buying bonanza in tech, Intel is your target. The chipmaker soared 8.1% after posting rock-solid earnings numbers. Stocks across the entire semiconductor industry were rallying in sympathy.
For the third quarter, Intel raked in earnings of $1.42 per share on revenue of $19.2 billion. Both metrics topped analyst estimates calling for $1.33 earnings per share on $18.1 billion in revenue.
Heading into the report, INTC stock was knocking on the door of resistance at $53 and primed for a breakout. The series of higher pivot lows seen over the past six months created an ascending triangle pattern. What’s particularly beautiful about the set up is the April earnings gap created a price void overhead allowing plenty of room to run when INTC finally cleared $53.
And run it did.
Friday’s 8% rip filled the majority of the gap and tees the stock up for a run toward $60. Intel shares are now a top candidate to buy into any weakness.
Moving into the options trading realm reveals a groundswell in call volume on Friday. Activity climbed to over five times the average daily volume, with 334,361 total contracts traded. 66% of the trading came from call options alone.
Speculators were baking in a move of 4.8% ahead of earnings, so the 8% ramp by day’s end pushed well outside of expectations. Implied volatility cratered and now rests at 25% of the 23rd percentile of its one-year range.
Tesla (TSLA)
Source: ThinkorSwim
Intel isn’t the only stock skyrocketing after earnings. Tesla just topped off a two-day 29% rally that demolished short sellers. The gains came after a surprising earnings release that showed the electric car maker turning a profit for the quarter. Both the speed and magnitude of the jump are incredible. At its low mark, TSLA stock was down 47% for 2019. Now it’s essentially flat on the year.
Tesla shares now sit well above all major moving averages. They are extremely overbought in the short run, but there’s no doubt bulls rule the roost. Like Intel, TSLA is a worthy buy-the-dip candidate into weakness.
On the options trading front, traders came after calls with a vengeance. Total activity swelled to 420% of the average daily volume, with 522,651 contracts traded. Calls added 53% to the session’s sum.
Implied volatility snapped back to 48% after falling dramatically during Thursday’s post-earnings crush. It now stands at the 13th percentile of its one-year range. Premiums are pricing in daily moves of $9.99 or 3%.
Amazon (AMZN)
Source: ThinkorSwim
After putting up disappointing earnings numbers, Amazon stock was taken behind the woodshed after hours on Thursday. Fortunately, buyers viewed the bloody open as a gift. Demand surged, and by day’s end, AMZN stock only ended down 1%. Friday’s candlestick formation is impressive. With virtually no lower or upper wick, it shows that buyers emerged immediately at the open and powered the stock higher throughout the day and into the closing bell.
The technical posture is still messy, however. AMZN needs to take out $1,800 before its daily trend looks bullish. Until then, there are better stocks to shop in the tech sector.
On the options trading front, traders favored calls by a slim margin. Total activity rose to 351% of the average daily volume, with 522,651 contracts traded. Calls accounted for 53% of the day’s take.
Earnings uncertainty rapidly unwound driving implied volatility into the basement. At 21%, it now sits at the 5th percentile of its one-year range. Premiums are now only pricing in daily moves of $23.42 or 1.3%.
As of this writing, Tyler Craig held bullish positions in INTC. For a free trial to the best trading community on the planet and Tyler’s current home, click here!