Despite a rough-and-tumble five days, stocks fought their way into the black last week, ending a recent losing streak. The major market indices added more than 1% on Friday, with the Dow Jones Industrial Average heading up the charge with a gain of 1.49%. The S&P 500 followed closely with a gain of 1.35%. On the options front, traders joined in the rally, sending the CBOE put/call volume ratio to a one-month low of 0.55. The 10-day moving average held at 0.66.
Taking a closer look at Friday’s most active options, Apple Inc. (NASDAQ:AAPL) traders had extra incentive in the form of a record $2.7 billion dividend payout, as the stock trades ex-dividend today. Elsewhere, MannKind Corporation (NASDAQ:MNKD) was hammered following its first-quarter earnings report, and Micron Technology, Inc. (NASDAQ:MU) drew additional call volume following a bullish analyst report from Jefferies.
Apple Inc. (AAPL)
With AAPL stock trading ex-dividend today, the shares were a hot topic for call traders on Friday. Overall, some 1.2 million AAPL options changed hands on Friday, with 62% of the session’s volume crossing on the call side.
Short-term out-of-the-money call strikes are quite popular in dividend capture strategies, so it should come as no surprise that the May $130 (98,713 contracts), May $135 (70,177 contracts), and May $140 (69,853 contracts) call strikes were among the most traded on the day.
As for Apple’s dividend, the company will be paying out 52 cents per share, or a record $2.7 billion, to shareholders of record as of May 11. The company’s dividend payment is part of a larger strategy by Apple to return some cash to stockholders, with the company also employing a healthy stock buyback program.
MannKind Corporation (MNKD)
MNKD shares were pummeled for a loss of more than 5% on Friday, as the company posted a first-quarter loss of 8 cents per share that was inline with some estimates and actually topped others. However, MannKind failed to produce a firm revenue figure for the quarter, and whiffed completely on any semblance of guidance.
The report was not only met with selling pressure for MNKD stock, but options traders also appeared to bet heavily against the security. On Friday, MNKD saw 132,847 contracts change hands, with 57% of the day’s volume trading on the put side of the tape.
Among May options, calls are still more prevalent, however, with the deep-out-of-the-money 10 strike sporting open interest of 42,885 call contracts. The May $10 strike is also home to peak put open interest, with 31,386 contracts residing here. Turning to June options, open interest slacks off considerably, with peak open interest totaling just 1,001 contracts at the $2.50 put.
Micron Technology, Inc. (MU)
Micron has had a rough year so far, with MU stock falling more than 23% since the start of 2015. Weak DRAM pricing and slow demand for smartphones and PCs has sapped the company’s bottom line, but analysts at Jefferies believe that traders shouldn’t count the stock out just yet. On Thursday, the brokerage firm reiterated its “buy” rating and $40 price target on the belief that Micron will outperform its peers and that DRAM prices could see a correction on the supply side in the next quarter.
Options traders took the research note to heart, with 60% of the 107,130 contracts trading on MU crossing on the call side. Short-term call traders are currently focused heavily on the May 30 strike, which sports open interest of 45,634 contracts, while the back-month June 30 strike is also quite popular, with open interest of 36,797 contracts.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
