Asset Classes

Free investment financial education

Language

Multilingual content from IBKR

Close Navigation
Learn more about IBKR accounts

Chart Advisor: Jobs on the Rise

Posted November 8, 2021 at 2:38 am
Gordon Scott
Investopedia

1/ Stocks push higher after good news on jobs

2/ Coming soon: AMC earnings 

3Airbnb earnings top estimates 

4/ The bottom line

1/ Stocks Push Higher After Good News on Jobs

Major averages edged higher, rallying to record levels on the strength of a better-than-expected October nonfarm payroll report. The iShares Russell 2000 ETF (IWM) led the way, climbing 1.3%. State Street’s Dow Jones Industrial Average ETF (DIA) and S&P 500 Index ETF (SPY) rose 0.5% and 0.3%, respectively, while Invesco’s Nasdaq 100 ETF (QQQ) remained flat.  

The U.S. added 531,000 non-farm jobs to the economy in October, greater than the 455,000 that was forecast. Coupled with a low reported unemployment rate (4.6% vs 4.7% expected), stocks reacted positively to indicators of an overall recovering economy. The issues plaguing the market recently—supply chain constraints,  the delta variant of COVID-19 , and inflation—were seemingly forgotten, at least temporarily.  

Stocks have shaken off a September swoon to rally to new highs as the market enters what has been historically its strongest quarter. This could mean that there is still room for the upward trend to continue for the near term.  

2/ Coming Soon: AMC Earnings 

Movie theater chain AMC (AMC) is set to report third-quarter earnings results on Nov. 8 after the market closes. Analysts are forecasting a net loss per share of $0.54 to go along with $733.35 million in revenue. Investors have bid up AMC shares prices in anticipation of the announcement, as AMC rose more than 15% in the past week.  

As illustrated on the chart below, this recent upward trend has propelled AMC stock to an above-average range, solidly above its 20-day moving average. Option traders also appear to be placing bets that the stock will rise in the future. Recent trading volumes favored calls over puts over 3-to-1.

The open interest for AMC features over 1.4 million calls compared to 954,000 puts. However, it should be noted that even though current put option open interest is higher than normal, implied volatility suggests that these options are being sold more than bought. This could be because option traders are optimistic toward AMC earnings and are selling put options in order to collect unusually high pre-earnings option premiums.   

3/ Airbnb Earnings Top Estimates 

Investors bought shares of Airbnb (ABNB) after the company reported its highest revenue and net income ever in its fiscal third-quarter earnings announcement. Analysts had expected the vacation rental company to report $0.83 in earnings per share and $2.06 billion in revenue. ABNB announced $1.23 in EPS and $2.24 billion in revenue, up 67% year-over-year (YOY). ABNB’s net income rose 280% to $834 million on a year-over-year basis.  

Encouraged by the positive earnings results, investors snapped up ABNB shares, which surged 12%. Option traders appear to be positioning themselves for the stock to continue to rise in the near term. That’s because trading volumes on Wednesday featured over 337,000 calls compared to fewer than 70,000 puts, a rate of nearly 5-to-1.

Options remain priced for the share to rise, as calls currently trade for more than puts, after accounting for intrinsic value. This could mean that investors are undeterred by the increased cost of call options and are placing their bets that ABNB shares will continue to rise. ABNB stock has gained 43% year-to-date. 

4/ The Bottom Line 

With unemployment numbers lower and jobs on the rise, stocks notched higher to close the week. Airbnb’s quarterly earnings came in well ahead of estimates while traders are showing a more subtle optimism on AMC ahead of its quarterly report. 

Originally posted on 5th November, 2021

Disclosure: Investopedia

Investopedia.com: The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy.  While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment or strategy. This information is intended for US residents only.

Disclosure: Interactive Brokers

Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Investopedia and is being posted with its permission. The views expressed in this material are solely those of the author and/or Investopedia and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

Disclosure: Penny Stocks

Low priced microcap securities (also known as “Penny Stocks”) represent low priced shares of small companies typically not traded or quoted on an exchange. Prices are often not available. Investors in Penny Stocks often are unable to sell stock back to the dealer that sold them the stock. Thus, you may lose your investment. Be cautious of newly issued Penny Stocks. For additional information please review the Penny Stock Trading Risk Disclosure at https://gdcdyn.interactivebrokers.com/Universal/servlet/Registration_v2.formSampleView?formdb=9490

Disclosure: Options Trading

Options involve risk and are not suitable for all investors. Multiple leg strategies, including spreads, will incur multiple commission charges. For more information read the "Characteristics and Risks of Standardized Options" also known as the options disclosure document (ODD) or visit ibkr.com/occ

IBKR Campus Newsletters

This website uses cookies to collect usage information in order to offer a better browsing experience. By browsing this site or by clicking on the "ACCEPT COOKIES" button you accept our Cookie Policy.