Option Movers | Tesla's Trading Volume Double as Investors Seek Protection; Netflix Fails to Beat IV Shrink

Option Movers2023-04-20

Market Overview

The S&P 500 ended virtually unchanged on Wednesday (Apr. 19th) while the Dow dipped as investors digested a mixed bag of corporate earnings, including upbeat reports from medical technology companies, countered by weakness in Netflix shares.

Regarding the options market, a total volume of 33,436,089 contracts was traded, up 7.6% from the previous trading day.

Top 10 Option Volumes

Top 10: SPY; QQQ; TSLA; VIX; AMZN; IWM; AAPL; Netflix; BBBY; NVDA

Source: Tiger Trade App

Options related to equity index ETFs are still popular with investors, with 6.54 million SPDR S&P500 ETF Trust and 2.28 million Invest QQQ Trust ETF options contracts trading on Wednesday.

Tesla Inc. missed first-quarter profit estimates after a series of price cuts designed to boost demand squeezed margins. Tesla has been slashing prices to protect its leading market position. Its operating margin was 11.4% in the three-month period, down from 16% last quarter and 19.2% a year ago. Unusually, it didn’t break out its automotive profit margin, which analysts have been watching closely.

Tesla Inc shares dropped 2% after the electric-vehicle maker's sixth U.S. price cut this year. A total volume of 1.53 million options related to Tesla Inc. was traded before earnings report, up about 97% from the previous trading day. Tesla shares slid 6% further in after-market trading following the company's quarterly report.

Netflix Inc shares slid 3.2%, which is a relatively small move compared with the previous quarters, after the video-streaming pioneer offered a lighter-than-expected forecast. However, short sellers also faced huge losses as the implied volatility of Netflix option shrank sharply, which dropped to 38.3 from 101 after mixed earnings reports.

It is hard to gain for the buy side under the circumstance that the volatility drops sharply, plus the accelerate loss of time value. The fluctuation of Netflix is not enough to offset the decay of time value.

Source: Market Chameleon

Most Active Options

1. Most Active Trading Equities Options:

Special %Calls >70%: Colgate; Procter & Gamble; Bed Bath & Beyond; Bank of America(BAC)$

Data From CBOE Trader Alert, as of 19 APR 2023 EDT

Special %Puts >70%: Micron; Block

Data From CBOE Trader Alert, as of 19 APR 2023 EDT

2. Most Active Trading ETFs Options

Special %Calls >70%: Nasdaq 100 Bear 3X ETF; iShares Silver Trust; VIX Short-Term Futures 1.5X ETF;

Data From CBOE Trader Alert, as of 19 APR 2023 EDT

Special %Puts >70%: $iShares iBoxx High Yield Corporate Bond ETF; iShares Russell 2000 ETF; Energy Select Sector SPDR Fund

Data From CBOE Trader Alert, as of 19 APR 2023 EDT

Unusual Options Activity

Source: Market Chameleon

Bed Bath & Beyond's option trading volume surged on Wednesday. BBBY shares closed more than 35% on Wednesday, while trading 21% lower after-hours following Bloomberg’s report in the morning, according to which the company is preparing for a potential bankruptcy filing as its recent attempts to raise funds have fallen short.

A total volume of 701.9K option related to Bed Bath & Beyond was traded. Senior market analyst Daniela Hathorn said the meme stock’s rally should be short-lived.

“With bankruptcy looming, the fundamentals of the company are not attractive to new investors, but renewed social media attention is causing a false sense of demand” Hathorn wrote. “As is usual with meme stocks, the bullish run may last a few days as it overheats, but it is unlikely to sustain any move higher and when momentum runs out of steam.”

TOP Bullish & Bearish Single Stocks

This report shows stocks with the highest volume of bullish and bearish activity by option delta volume, which converts option volume to an equivalent stock volume (bought or sold).

If we take the total positive option delta volume and subtract the total negative option delta volume, we will get the net imbalance. If the net imbalance is positive, there is more bullish pressure. If the net is negative, there is more bearish pressure.

Top 10 bullish stocks: SQ; NFLX; PG; MRNA; BBBY; MSFT; CVNA; SABR; QCOM; NVDA

Top 10 bearish stocks: BABA; BAC; F; AAL; NIO; SNAP; GOOGL; LAZR; CG; ENVX

Source: Market ChameleonSource: Market Chameleon

Source: Market Chameleon

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