U.S. stock futures are edging higher this morning. Wall Street's positive bias could be shaken by key inflation data later this morning. February consumer prices data is due out today, and a stronger-than-expected figure could raise inflation concerns. Economists are currently expected consumer prices to rise 0.2%, with the core reading also up 0.2%.
Heading into the open, Dow Jones Industrial Average futures have added 0.19%, S&P 500 futures are up 0.21% and Nasdaq-100 futures have gained 0.15%.
Turning to the options pits, volume was mediocre on Monday. About 18.2 million calls and 15.3 million puts changed hands. The CBOE single-session equity put/call volume ratio ticked lower to 0.57. The 10-day moving average fell to a six-month low of 0.61.
Taking a closer look at yesterday's options activity, Advanced Micro Devices, Inc. (NASDAQ: AMD ) continued to see heavy put volume despite indications that VR movie "Ready Player One" could boost demand. Meanwhile, Micron Technology, Inc. (NASDAQ: MU ) had its price target boosted twice yesterday to lofty valuations. Finally, Comcast Corporation (NASDAQ: CMCSA ) saw a rather unusual calendar spread take place yesterday.
Advanced Micro Devices, Inc. (AMD)
Anyone who remembers the effect the 1989 flick "The Wizard" had on demand for Nintendo Co., Ltd's (OTC: NTDOY ) PowerGlove accessory knows that Hollywood can have a big impact on the tech sector. According to Jefferies & Co. , Warner Brothers' new VR flick "Ready Player One" could be a similar "catalyst" for demand in the GPU industry.
"We also think that Ready Player One has the potential to appeal to a electronics game savvy audience that is motivated to have a more immersive experience," Jefferies wrote. As the main beneficiaries of such demand, Advanced Micro Devices and Nvidia Corporation (NASDAQ: NVDA ) could benefit as a result.
However, AMD options traders continued to prefer puts over calls in light of the bullish note. Volume rose to 819,000 contracts, with puts making up 62% of the day's take. AMD puts have gained considerable popularity in the past two weeks, with the March and April $10, $11 and $12 strikes seeing heavy put accumulations.
Yesterday, AMD's March $10 put garnered the most attention. Volume for this front-month strike came in at 131,000 contracts, with 52% of these trading at the ask price, according to Trade-Alert.com data.
Micron Technology, Inc. (MU)
Micron continued to rally into overbought territory yesterday. MU stock's 14-day relative-strength index (RSI) is now hovering north of 80, 10 points above typical overbought readings.
Driving the shares higher was a pair of rather lofty price-target increases . Evercore ISI boosted MU's price target to $80 from $60, while Nomura/Instinet nearly doubled its target to $100 from $55. Nomura said it believes MU stock is in the "early stages of another major breakout."
Option volume on MU stock nearly tripled its daily average yesterday following the news. More than 775,000 contracts traded, with calls gobbling up 72% of the day's take. Micron's most active strike on the day was the March $60 call, which drew volume of 46,000 contracts - 38% of which traded at the ask price.
Looking out to April, Micron's put/call open interest ratio has fallen to 0.52, with calls nearly doubling puts for the series, indicating heavy optimism for MU shares.
Comcast Corporation (CMCSA)
Despite a lack of any major headline news, Comcast stock saw a marked uptick in options activity yesterday. Volume rose to 232,000 contracts, coming in at more than six times CMCSA's daily average. Even more intriguing was that the bump did not favor either calls or puts, which were both split nearly evenly on the day.
Digging into the activity reveals that one trader initiated a rather unusual calendar spread on CMCSA stock. According to data from Trade-Alert.com, the trader bought both the March $40 call and the June $40 put while simultaneously selling the March $40 put and the June $40 call.
In other words, this trade opened a synthetic March long trade by buying the $40 call and selling the $40 put, and a synthetic June short trade by purchasing the $40 put and selling the $40 call. The result is a net debit of 6 cents per set of four contracts.
While the trader's exact expectations are not completely clear, this trade appears to be a play on volatility, betting on a near-term rally for CMCSA, with resistance emerging near $40 heading into the middle of the year.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
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