Stocks remained calm Thursday as Wall Street continued to digest the possibilities and timing of a Fed rate hike following this week’s release of the latest FOMC meeting minutes. Once again, however, the major market indices will depend on a Friday rally to find positive purchase on the week. Options activity also remained calm, with the CBOE’s put/call volume ratio held at 0.6 while the 10-day moving average slipped to 0.64.
Among the day’s most active stocks in the options pits were General Electric Company (NYSE:GE), Zynga Inc (NASDAQ:ZNGA) and Altera Corporation (NASDAQ:ALTR), all of which had some very major headlines attached.
General Electric Company (GE)
Shares of blue-chip conglomerate General Electric gained nearly 3% on Thursday and are trading more than 6% higher in premarket activity this morning following news that the company is nearing a deal to divest its real-estate portfolio. Private equity firm Blackstone Group LP (NYSE:BX) and Wells Fargo & Co (NYSE:WFC) will reportedly snap up GE’s real-estate businesses for a pricey sum of $30 billion.
Activity in the options pits reached short-term record levels for GE stock, with 230,540 contracts trading on the issue. Overall, some 85% of Thursday’s volume crossed on the call side, keeping with recent trends for the stock.
The most active strike was the May $26 call, where 11,589 contracts traded on open interest of 35,302 contracts. However, the most interesting activity took place at the weekly April 10 series $25.50 call strike, where 3,613 contracts traded on open interest of 3,202 contracts.
With open interest at this weekly strike now sitting at 7,562 contracts following translation, most of yesterday’s volume appears to have been the initiation of fresh positions.
Zynga Inc. (ZNGA)
Zynga Chairman and former CEO Mark Pincus took quite a hit to the ego Thursday, as investors expressed their extreme displeasure with the news that Pincus was once again assuming the CEO role. ZNGA stock plunged nearly 18% yesterday, as CEO Don Mattrick was ousted from the top spot. While Mattrick failed to instill the kind of growth many had expected in his year-and-a-half at the helm of Zynga, it appears investors still remember the 40% haircut that ZNGA stock took in the final months of Pincus’ stint as CEO.
Despite the overall malaise, ZNGA options activity remained largely call heavy. Of the 235,344 options contracts trading on the shares yesterday, some 52% were of the call variety. That said, the most active contract on the day was the April $2.50 put, where 1,666 contracts traded on open interest of 24,491 contracts.
It also is important to remember that calls can be utilized to hedge short bets against the stock, but we will have to wait on additional data to see if short interest saw a significant increase following the announcement.
In premarket trading, ZNGA has recovered somewhat, adding about 1.26% at last check.
Altera Corporation (ALTR)
The bottom fell out of Intel Corporation’s (NASDAQ:INTC) planned takeover of Altera on Thursday. According to reports, the company was unable to agree upon a price, with Altera stating that Intel’s $50-per-share bid was too low. While ALTR stock was down as much as 6% at one point during Thursday’s trading, the stock recovered to close up 3.17% on the day.
ALTR stock was second only to Apple Inc. (NASDAQ:AAPL) on yesterday’s most active options list, with more than 238,900 contracts trading on the issue. Furthermore, options traders appeared unfazed by Intel’s departure, with 63% of yesterday’s volume crossing on the call side.
The most active strike was the June $28 call, where 2,277 contracts traded on open interest of 5,825 contracts. Meanwhile, the most interesting activity took place at the September $45 call, where 2,000 contracts traded on open interest of just 118 contracts. Open interest at this back-month strike now stands north of 2,000 contracts, indicating the Thursday’s activity was the initiation of fresh call positions.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
