Stocks continued their strong start to February on Tuesday, with the major market indices logging strong gains the session. Among the top 10 most active stocks in the options pits were Twitter Inc. (NYSE:TWTR), Gilead Sciences, Inc. (NASDAQ:GILD) and Office Depot Inc (NASDAQ:ODP).
In the options pits, traders continued to favor calls over puts, as the CBOE equity put/call volume ratio fell 0.58, its lowest reading of the past eight session.
Twitter Inc. (TWTR)
Calls were popular on Twitter as the company edges closer to the release of its fourth-quarter earnings report after the close on Thursday. Roughly 75% of the 225,000 contracts trading on TWTR stock traded on the call side of the tap, hinting at elevated expectations heading into the report.
The stock’s February/March put/call open interest ratio has turned lower as a result of the attention, arriving at 0.62 yesterday — a reading that ranks in the lower third of all those taken in the past year.
Checking in on the numbers, Twitter is expected to post a profit of 6 cents per share on revenue of $453.3 million. EarningsWhisper.com places the company’s fourth-quarter whisper number a penny higher at 7 cents per share.
Twitter had 284 million monthly active user accounts at the end of the third quarter, and investors will be paying close attention to growth in this figure, as well as any news on Twitter video.
Gilead Sciences Inc. (GILD)
Biopharmaceutical firm Gilead Sciences was also popular among call traders on Tuesday, with 63% of the 127,000 contracts traded on the stock crossing as calls. Despite the added call attention, GILD stock’s February/March put/call open interest ratio has been on the rise during the past week, arriving yesterday at a reading of 0.71 near the middle of its annual range.
After the close last night, Gilead posted strong fourth-quarter earnings results, but issued guidance below Wall Street’s expectations. The company set 2015 sales expectations between $26 billion and $27 billion, compared with Wall Street’s target of $28.7 billion.
As a result, GILD stock is down more than 6% in pre-market trading, with the shares flirting with support at the century mark. A breach of support here could lead to additional follow through selling pressure.
Office Depot Inc. (ODP)
Shares of office supply firm Office Depot surged more than 21% on Tuesday, as traders reacted to a $6 billion buyout offer from fellow office supply firm Staples Inc. (NASDAQ:SPLS). The deal values ODP stock at $11 per share, well above the stock’s close at $5.43 on Monday.
Options traders jumped at the chance to chase ODP stock’s rally, with 81% of the 119,000 contracts trading crossing on the call side. Prior to yesterday’s activity, ODP’s February/March put/call open interest ratio had been on the rise, rebounding from a near-term low of 0.12 to a perch at 0.21 as of the close yesterday.
Following translation yesterday’s activity, this reading should turn back toward its annual lows.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
