Thursday’s Vital Data: Bank of America Corp (BAC), Alibaba Group Holding Ltd (BABA) and GoPro Inc (GPRO)

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The major market indices headed lower on Wednesday, as concerns about deflation and slowing growth in the eurozone weighed on sentiment. On the day, the Nasdaq shed 0.63% and the S&P 500 slipped 0.37%. Options traders were quick to pick up on the shift in trading tone, as the CBOE’s put/call volume ratio turned higher to finish at 0.69. The 10-day moving average rose to 0.64.

Zeroing in on Wednesday’s heavy options activity, traders jumped on Bank of America Corp (NYSE:BAC) calls following news that the company had settled an investor lawsuit regarding the manipulation of foreign-exchange rates. Meanwhile, Alibaba Group Holding Ltd (NYSE:BABA) stock drew mixed options volume after the company announced a hiring freeze, and GoPro Inc (NASDAQ:GPRO) stock was call heavy after the stock gapped sharply higher on strong first-quarter earnings.

Thursday’s Vital Data: Bank of America Corp (BAC), Alibaba Group Holding Ltd (BABA) and GoPro Inc (GPRO)

Bank of America Corp (BAC)

Bank of America shares rallied more than 2% on Tuesday, leaving the shares just shy of overhead resistance in the $16 region. Traders appeared to take heart in news that BofA settled an investor lawsuit alleging foreign currency manipulation on forex for $180 million. Bank of America’s rivals JPMorgan Chase & Co. (NYSE:JPM) and UBS Group AG (USA) (NYSE:UBS) had previously agreed to similar deals.

Trading was brisk on Wednesday, with BAC stock seeing higher-than-average options volume. Overall, 424,390 contracts traded on BofA stock, with 79% of those contracts crossing on the call side. Peak May call open interests levels could be something to watch for BAC, with 246,913 contracts open at the overhead May $17 call strike, while another 239,012 contracts reside at the May $16 strike.

Open interest at these strikes looks suspiciously like call spread activity, though whether it is bull or bear spread activity remains to be seen.

Alibaba Group Holding Ltd (BABA)

Shares of Chinese Internet search giant Alibaba dipped more than 3% on Wednesday, reflecting growth concerns for the firm following remarks from CEO Jack Ma. According to Ma, BABA grew too quickly and is now in the midst of a hiring freeze until further notice. Ma made it clear, however, that the company wasn’t overstaffed or struggling to pay employees.

Normally bullish, options volume on BABA turned toward mixed activity on Wednesday, with just 57% of the day’s total volume of 223,247 contracts trading on the call side. Looking ahead to May open interest, traders are heavily focused on the in-the-money May $80 call strike, where 27,141 contracts currently reside. On the put side, the May $80 strike is home to peak open interest for the series, sporting open interest of 70,242 contracts.

Should BABA stock continue to dip, the $80 region could become a battleground later this month.

GoPro Inc (GPRO)

GoPro investors cheered on Tuesday after the company blew past Wall Street’s first-quarter earnings expectations. The company posted a profit of 24 cents per share, easily besting the consensus estimate for 18 cents per share. Revenue rose 54% to $363.1 million, eclipsing the Street’s view for $341 million. GoPro also forecast second-quarter results ahead of Wall Street’s expectations.

Naturally, calls were the topic of choice in the options pits for GPRO stock. Volume totaled 125,295 contracts, with 71% of the day’s activity trading on the call side. May options are currently showing peak open interest at the May $50 call strike, with 12,548 contracts open.

Look for additional call activity as GPRO heads higher, especially with short sellers looking for cover. As of the most recent reporting period, 19.3 million GPRO shares were sold short, representing a whopping 40.2% of the stock’s total float, or shares available for public trading.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/04/thursdays-vital-data-bank-america-corp-bac-alibaba-group-holdings-ltd-baba-gopro-inc-gpro-options/.

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