The bulls crept back onto Wall Street on Tuesday, as the major market indices edged higher. Options traders took note, with calls returning to some favor on the CBOE; the exchange’s put/call volume ratio reversing course to stand at 0.57. Among the top 10 most active stocks in the options pits were Transocean LTD (NYSE:RIG), Hewlett-Packard Company (NYSE:HPQ) and Intel Corporation (NASDAQ:INTC).
Transocean LTD (RIG)
Shares of deepwater oil drilling concern Transocean dipped nearly 2% on Tuesday following a bearish brokerage note from Barclays. According to analysts at the firm, Transocean could be the first in a wave of energy firms to have their debt ratings slashed to junk status.
Transocean is set to release its quarterly earnings report after the close today, with the consensus expecting a profit of 79 cents per share. Per Barclays, analysts could see this report as a catalyst for such a debt ratings change.
Anticipating the worst, options trader piled into puts on RIG stock yesterday. Overall, some 123,932 contracts were trade on RIG, with 77% of Tuesday’s volume changing hands on the put side.
Hewlett-Packard Company (HPQ)
Shares of Hewlett-Packard are down nearly 7% in premarket trading after the company reported a 4.1% decline in quarterly earnings. Additionally, the company lowered its full-year earnings guidance estimate by 30 cents per share thanks to a negative impact from foreign exchange. Hewlett-Packard now expects earnings of $3.53 to $3.73 for the full year.
If premarket activity carries over into the open, options traders who jumped on HPQ calls may end up getting burned this morning. Of the 119,449 contracts that traded on HPQ stock yesterday, some 77% of those crossed on the call side. At last check, HPQ stock was threatening to open below key technical support at its 200-day moving average.
Intel Corporation (INTC)
Shares of semiconductor giant Intel rose nearly 2% on Tuesday as traders responded bullishly to news that BNP Paribas initiated coverage on INTC stock with an “outperform” rating and a $42 price target. The rally carried INTC stock above its 10- and 20-day moving averages, pulling this short-term duo into a bullish cross — a technical development that has short-term bullish implications.
Not missing a beat, INTC options traders responded with calls. Of the 103,957 contracts trading on INTC stock, 69% of those traded on the call side. Most of this activity took place in the weekly Feb. 27 series of options, trading as a mix of profit taking and initiation of fresh positions.
Heading into the open, INTC stock was off about 0.75%.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
