The major market indices bounced back Thursday, driving heavy call volume for a second-consecutive session. Among the top 10 most active stocks in the options pits were Amazon.com, Inc. (NASDAQ:AMZN), Qualcomm, Inc. (NASDAQ:QCOM), and McDonald’s Corporation (NYSE:MCD). Overall, the CBOE equity put/call volume ratio fell for a second day in a row, arriving at a reading of 0.64.
Other notable highlights from Thursday include a wave of put volume for Brazilian mining firm Vale SA (ADR) (NYSE:VALE), which saw 74% of yesterday’s options activity trade on the put side of the tape following negative analyst activity, and Yahoo! Inc. (NASDAQ:YHOO), where 69% of the stock’s options volume consisted of call contracts after Alibaba Group Holding Ltd (NASDAQ:BABA) posted disappointing Q4 results.
Amazon.com, Inc. (AMZN)
Options activity was nearly split down the middle on Amazon.com yesterday, with calls narrowly winning out by claiming 52% of the 159,521 AMZN contracts changing hands. Traders were understandably cautious heading into Amazon’s fourth-quarter earnings report, as sentiment was mixed ahead of the event. With AMZN stock up more than 12% in after-hours trading, fortune appears to have favored the bold.
Amazon posted blowout Q4 figures, with earnings arriving at 46 cents per share, more than doubling the consensus estimate for 18 cents per share. Revenue rose 15% to $29.33 billion, and Prime memberships soared 53% year-over-year.
Returning to AMZN’s options data, the weekly Jan 30 series was the most popular, with traders angling to take profits ahead of today’s expiration. The front-month February series was also quite popular, with traders zeroing in on the $340, $350 and $400 call strikes. If after-hours trading holds firm, AMZN stock is poised to open just shy of its September highs in the $350 region.
Qualcomm, Inc. (QCOM)
Shares of QCOM were hammered for a loss of more than 10% on Thursday, as traders reacted to news that the company lowered its guidance for the second half of 2015. Qualcomm said its Snapdragon 810 processor would not be in a flagship mobile device during the next design cycle, and that a strong U.S. dollar was negatively impacting overseas sales, especially in China.
As a result of the poor price action and disappointing fourth-quarter report, QCOM options traders, which are typically call-heavy, switched to puts on Thursday. In fact, 59% of all QCOM options volume traded on the put side of the tape, with the February series receiving the brunt of the activity. Namely, the Feb $60, $75 and $80 put strikes dominated trading activity, with more than 2,000 contracts crossing each.
QCOM stock is now trading at its lowest point since mid-2013. The stock plunged below all of its major daily and weekly moving averages, and faces potentially stiff technical resistance at $65, which is home to QCOM’s 200-week moving average.
McDonald’s Corporation (MCD)
MCD stock surged more than 5% on Thursday as investors celebrated the departure of CEO Don Thompson. Since Thompson ascended to CEO in 2012, MCD stock has added a whopping 0.3% compared to the S&P 500’s gain of roughly 50%
Options traders were lovin’ it, with roughly 86% of all MCD’s options volume trading on the call side. February calls were the most popular, with some 3,000 contracts trading on the Feb $92.5 strike. When the smoke cleared Thursday, this option finished in the money. Other strikes receiving notable volume were the Feb $97.50 and $95 strikes.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
