After banking two days of solid gains, the major market indices took a breather on Wednesday, closing essentially flat on the session. Among the top 10 most active stocks in the options pits were Advanced Micro Devices, Inc. (NASDAQ:AMD), Walt Disney Co. (NYSE:DIS) and General Motors Company (NYSE:GM) — all of which are newcomers to the list.
Another newcomer, The Blackstone Group L.P. (NYSE:BX) saw extremely heavy call activity on Wednesday, with 97% of the 226,584 contracts trading crossing on the call side. With the stock going ex-dividend today, this call volume was likely related to dividend capture strategies.
Overall, calls remain the investment vehicle of choice on the CBOE, with the exchange’s put/call open interest dipping to a near-term low of 0.51.
Advanced Micro Devices Inc. (AMD)
AMD options traders have been extremely busy this week. On Tuesday, call options traded at eight times their daily average, with activity highlighted by a sold block of 50,000 Jul 3 calls. Then on Wednesday, the pendulum shifted back the other way, as put volume swelled to account for 82% of the nearly 200,000 contracts changing hands on AMD stock.
Technically speaking, options traders have plenty of reason to bet against AMD stock. The shares have shed more than 25% since July, with AMD spending the past several weeks bouncing around in the $2 region. Furthermore, stiff resistance lies overhead at the $3 level — which is home to the block of 50,000 sold July calls.
AMD stock has shown signs of life recently, rallying 3.2% yesterday to close within striking distance of $3. Time will tell if recent options activity will prove to be smart money or not.
Walt Disney Co. (DIS)
Investors cheered Walt Disney’s stellar first-quarter earnings report yesterday, after the company easily topped Wall Street’s expectations. Earnings came in at $1.27 per share on revenue of $13.4 billion, versus the consensus target of $1.07 per share on sales of $12.9 billion. DIS stock jumped 7.6% on the session, tagging a fresh multi-year high of $101.28.
Options traders were jazzed as well, with 76% of the 196,000 contracts traded on DIS stock crossing on the call side. The soon-to-expire weekly Feb 6 series options were the most popular, as traders took profits ahead of expiration, while the back-month April series also saw considerable volume, with the April $100 strike call attracting volume of 1,215 contracts.
General Motors Company (GM)
Shares of General Motors also soared following a strong quarterly earnings report. Boosted by strong truck sales, including SUVs and high end pickups, GM banked a profit of $1.19 per share, blowing the Street’s forecast for earnings of 86 cents per share out of the water.
Naturally, options traders responded by heavily favoring call options on Wednesday. Roughly 76% of GM’s options activity traded on the call side yesterday, with profit taking activity dominating the weekly Feb 6 series of options. Traders also focused on the monthly February series, with the $35, $36 and $37 strikes seeing strong volume.
Technically, GM vaulted above prior resistance at its 10-day and 20-day moving averages, but closed the session just shy of long-term resistance at $36.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
