The major market indices on Monday bounced back from recent weakness, as stocks headed mostly higher. While it wasn’t a significant change, trading on the CBOE shifted slightly toward calls, with the exchange’s put/call volume ratio slipping from a one-month high to rest at 0.65.
Among the top 10 most active stocks in the options pits were Apple Inc. (NASDAQ:AAPL) — watched closely Monday amid its Apple Watch reveal — Alibaba Group Holding Ltd (NYSE:BABA), BlackBerry Ltd (NASDAQ:BBRY). Here’s what traders can gleam from this activity.
Apple Inc. (AAPL)
Apple was back in the headlines Monday after the company unveiled its Apple Watch at its Spring Forward event. Additionally, Apple announced a standalone HBO Now service, which is exclusive among set-top devices to the Apple TV and will arrive in time for the start of the new Game of Thrones season premier.
The event was met with limited fanfare for an Apple event, as AAPL stock added less than half-a-percent on the day. Options activity was also muted, with only about 65% of the 1.3 million AAPL options contracts trading on the call side. Attention appears to have shifted away from the weekly March 13 series toward the front-month March series, which expires on March 20.
Currently, peak call open interest totals a hefty 167,823 contracts at the March $115 strike. Alternately, some 173,980 contracts are open at the March $115 put strike.
In premarket activity, AAPL shares are down roughly 0.72%.
Alibaba Group Holding Ltd (BABA)
Shares of struggling Chinese Internet giant Alibaba were smacked for a loss of 2.22% on Monday, and the shares are down another 1.25% in premarket trading this morning. Investors appear to be worried about new regulations from Chinese officials that will force Alibaba to update its sales and marketing policies. The crackdown comes in the wake of Alibaba’s inability to prevent some vendors from false advertizing and marketing to attain “top seller” list status.
Despite the decline in BABA stock, options traders remained focused on calls on Monday. Of the 168,965 contracts trading on BABA stock, 60% of those crossed on the call side. While weekly March 13 series options remain popular, the front-month March series is gaining popularity this week.
Overall, peak March open interest resides at the deep out-of-the-money March $120 strike, where 40,378 contracts currently reside. Another 27,867 contracts and 20,852 contracts are currently open at the March $105 and $110 call strikes, respectively.
BlackBerry Ltd (BBRY)
Goldman Sachs has some serious doubts regarding BlackBerry’s business model, and the brokerage firm laid those concerns bare yesterday. In fact, Goldman downgraded BBRY stock to “sell” yesterday morning, claiming that BlackBerry’s software model was shaky at best, with success tied to the company’s ability to grow its Enterprise Mobility Management software business.
BBRY stock traders responded in kind, sending the shares for a loss of 7.59% on Monday.
BlackBerry is once again trading in single-digit territory, closing below its 200-day moving average for the first time since December. That said, options traders hedged their bets, with 64% of the 86,730 contracts trading on BBRY crossing as calls. Among short-term options traders, the most popular BBRY strike remains the March 12 call, where 33,477 contracts currently reside.
In premarket trading, BBRY is down nearly 1% at last check.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
