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Tuesday’s Vital Data: Micron Technology, Inc. (MU), Chesapeake Energy Corporation (CHK) and Best Buy Co Inc (BBY)

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U.S. stock futures are plunging this morning after North Korea conducted a ballistic missile test over Japanese airspace. Japanese Prime Minister Shinzo Abe responded by calling the test an "unprecedented, grave and serious threat that seriously damages peace and security in the region."

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So far, Wall Street investors are fleeing stocks for investments seen as safer havens as tensions skyrocket once more.

As a result, Dow Jones Industrial Average futures have fallen 0.51%, S&P 500 futures have dropped 0.58% and Nasdaq-100 futures have plummeted 0.81%.

On the options front, volume all but evaporated on Monday, with only about 11.1 million calls and 8.7 million puts changing hands. On the CBOE, the single-session equity put/call volume ratio dropped to 0.55 and the 10-day moving average ticked lower to 0.65.

Turning to Monday's options activity, call volume leapt on Micron Technology, Inc. (NASDAQ: MU ) after Western Digital Corp (NASDAQ: WDC ) drew closer to buying Toshiba's NAND flash memory division. Elsewhere, Chesapeake Energy Corporation (NYSE: CHK ) is struggling with refining capacity amid the fallout of Hurricane Harvey. Finally, Best Buy Co Inc (NYSE: BBY ) drew heavy put volume ahead of this morning's second-quarter earnings.

Micron Technology, Inc. (MU)

While Western Digital buying Tohsiba's NAND flash unit may not seem related to Micron's business, analysts at Mizuho Securities believe otherwise. According to the firm, such a deal would "be positive for the memory markets (MU), NAND and WDC earnings as it keeps NAND IP protected and Capex disciplined." In other words, the deal would help bolster NAND prices, which investors were worried would fall with reports of a production glut in the market.

MU options traders were quick to jump on the news, sending more than 161,000 contracts across the tape yesterday. What's more, 81% of that activity was in the form of call options, or bets that MU stock would rise. That said, MU options traders were already extremely bullish on the stock's prospects.

Specifically, the September put/call open interest ratio has plunged to a reading of 0.31, indicating that calls more than triple puts in the front-month series. Still, peak September call OI rests at the now in-the-money $30 strike, hinting that there is room for position roll-ups or additional out-of-the-money positions for MU stock without overcrowding the bull trade.

Chesapeake Energy Corporation (CHK)

At one point on Monday, CHK stock was down more than 5% as traders worried about Hurricane Harvey's impact on Chesapeake's production facilities in the Houston, Texas, area. CHK bounced back to close down just 3.7% on Monday, but concerns still linger in Harvey's aftermath. So far, Harvey has shut down 11% of the U.S.'s refining capabilities, and Chesapeake expects lower production volume until it can resume Gulf Coast operations. There is currently no information on when that might happen.

CHK options traders clearly aren't expecting things to get back to normal any time soon. Volume surged to 116,000 contracts - more than double CHK's daily average. Furthermore, put volume spiked to claim 71% of the day's take, as traders bet on an extended decline for CHK shares. Already, more than 11,000 Sep $4 puts are trading in the money after yesterday's drop, with another 11,000 lingering just below CHK stock at the $3.50 strike.

Best Buy Co Inc (BBY)

Best Buy proved once again that it's more than just an Amazon.com, Inc. (NASDAQ: AMZN ) showroom this morning. The company posted second-quarter earnings of 69 cents per share on revenue of $8.9 billion, besting Wall Street's targets for 63 cents per share on sales of $8.7 billion. Best Buy also said that same-store sales rose 5.4% on the quarter, topping the consensus view for a rise of just 2.1%.

However, after initially spiking some 5% on the news, BBY stock has succumbed to broader market selling pressure and is headed for a flat to negative open. Such a development would cheer BBY bears, who loaded up on put options heading into this morning's report.

Monday's volume surged to over 94,000 contracts, nearly 10 times BBY's daily average. Puts made up the bulk of the session's activity, claiming 70% of the take. Still, despite the added put volume, BBY's September put/call OI ratio now rests at a mediocre reading of 0.71. If the stock can overcome today's broad market pressure, it could see some upside drift in the wake of this morning's report.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.

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The post Tuesday's Vital Data: Micron Technology, Inc. (MU), Chesapeake Energy Corporation (CHK) and Best Buy Co Inc (BBY) appeared first on InvestorPlace .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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