Monday’s Vital Data: Apple Inc., Bank of America Corp and Yahoo! Inc.

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With Wall Street neck deep in earnings season, call options have become quite popular of late. Overall, the CBOE equity put/call volume ratio came in at 0.7 on Friday, even as the overall market finished relatively flat. Stocks with options activity in focus for the session include Apple Inc. (NASDAQ:AAPL) and Yahoo! Inc. (NASDAQ:YHOO), both of whom are on the earnings docket this week, while Bank of America Corp (NYSE:BAC) rounded out the top three.

Other notables include Facebook Inc (NASDAQ:FB), where 71% of the stock’s option volume traded on the call side, while Microsoft Corporation (NASDAQ:MSFT) and Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR, NYSE:PBR.A) were favorites with put traders.

Monday's Vital Data: Apple Inc., Bank of America Corp and Yahoo! Inc.

Apple Inc. (NASDAQ:AAPL)

With Apple slated to release its first-quarter earnings figures after the close this Tuesday, AAPL stock’s perch at the top of Friday’s most active options list should come as no surprise. Analysts are expecting a 25% jump in earnings to $2.59 per share, with revenue seen rising 17% to $57.6 billion.

Estimates are rising, however, and EarningsWhisper.com places the whisper number at $2.74 per share for Apple earnings. This target shouldn’t be too hard for Apple to hit, especially if the company hits average iPhone unit sales expectations 66.5 million.

Digging into Friday’s options activity, most of the volume took place in the expiring weekly Jan. 23 series of options. However, notable call volume of 7,234 contracts changed hands at the out-of-the-money $120 strike in the weekly Jan. 30 series. The $115 and $113 call strikes also saw heavy activity, with more than 3,000 contracts trading on each of the Jan. 30 series contracts, which expire at the end of this week.

For the most active Jan $120 strike calls to finish in-the-money, AAPL stock would need to add more than 6% before the end of the week. With implieds forecasting a potential move of only about 5.35%, traders purchasing these contracts are betting on big numbers from Apple on Tuesday.

Bank of America Corp (NYSE:BAC)

Puts were popular on Bank of America early in the week, after BofA missed fourth-quarter revenue expectations by a whopping $2 billion. As you can see from the chart above, however, the company quickly regained favor with options traders, as some 67% of Friday’s volume changed hands on the call side of the tape.

Technically, after tagging a post-earnings low near $15 on Jan. 16, BAC stock rallied back on Thursday to stop just shy of overhead resistance at their 50-day moving average. This trendline could prove to be quite a thorn in BAC’s side over the short-term, and options traders appear to be keying off this technical hurdle.

Specifically, heavy call volume was focused at the $15.50 (1,544 contracts), $16 (3,025 contracts) and $16.50 (1,294 contracts) strikes in the weekly Jan. 30. Meanwhile, Friday’s peak call volume for BAC stock traded on the March $16 strike, where 6,290 contracts changed hands.

In other words, short-term traders aren’t setting their sights very high for any extended rebound for BofA stock, meaning the shares could remain under pressure for some time.

Yahoo! Inc. (NASDAQ:YHOO)

With 59% of the take, call volume was notably higher on Yahoo stock this past Friday. Like Apple, Yahoo will join the veritable flood of earnings announcements this week when the company steps up to the podium after the close on Tuesday.

Yahoo! is expected to post earnings of 29 cents per share, with EarningsWhisper.com setting the bar at 33 cents per share. The real story that will intrigue Wall Street analysts, however, is that Yahoo is expected to announce a tax savings plan for how it will eventually sell its stake in Alibaba Group Holding Ltd (NYSE:BABA) when it’s eligible to next fall.

Returning to YHOO stock options, the weekly Feb. 6 series $52 call and the monthly Feb $60 call were the most active contracts, with volume of 2,704 and 2,226 contracts changing hands, respectively. Both contracts are deep out of the money, and if purchased, would represent sizable bets that YHOO stock is set to appreciate significantly over the couple of months.

Technically, YHOO rallied sharply in October, but ran into considerable resistance at $50 by November. The shares have strayed little from this baseline since.

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

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Article printed from InvestorPlace Media, https://investorplace.com/2015/01/mondays-vital-data-apple-inc-bank-of-america-corp-and-yahoo-inc-bac-yhoo-aapl/.

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