Gains were limited on Wall Street on Thursday, as hiccups in the Greek debt situation overshadowed strong U.S. retail and jobs data. The major market indices still managed to eek out gains, however, with the S&P 500 poised to end a two-week losing streak. Options activity was on the light side, which is no surprise for summer. On the day, the CBOE put/call volume ratio bounced back to 0.59, while the 10-day moving average edged lower into two-month-low territory at 0.58.
Diving into Thursday’s top 1o most active options …
Amazon.com, Inc. (NASDAQ:AMZN) made headlines by announcing it was selling ad space on packaging, while Facebook Inc (NASDAQ:FB) launched its new Oculus Rift VR headset, complete with a surprise partnership with Microsoft Corporation (NASDAQ:MSFT). Finally, even analysts are admitting that they really don’t know why Gilead Sciences, Inc. (NASDAQ:GILD) has turned around so significantly this year.
Amazon.com, Inc. (AMZN)
Amazon.com’s new potential revenue stream has some analysts scratching their heads: selling advertising on shipping cartons. Soon, orders you place with Amazon.com may arrive at your door in cartons with the trademark Amazon “swoosh” replaced by targeted product advertizing from other products. The new ad plan is currently in testing phases, but Amazon reps have said that the process would not impact shipping times.
AMZN stock edged half-a-percent higher following reports of the ad plan, with the shares continuing to hover just above $430 per share. Option volume for AMZN was nothing to write home about, however, with only about 81,211 contracts changing hands — though with Thursday’s light volume, it was enough to put the stock on the day’s most actives listing. Roughly 58% of Thursday’s volume traded as call contracts.
But, while calls remain popular for AMZN, out-of-the-money call activity remains thin among short-term options traders. For instance, peak June call open interest totals 6,614 contracts at the $425 strike, while only about 4,636 contracts are open at the $450 strike.
Should AMZN break out of its currently tight trading range, look for more out-of-the-money calls to gain traction.
Facebook Inc (FB)
Facebook officially launched its new Oculus Rift VR headset this week, and surprised investors by launching the device with a Microsoft Xbox One controller. The Oculus Rift headset also will work natively with Microsoft’s new Windows 10 operating system.
Finally, gamers will also be able to stream Xbox One games, such as Halo 5, Forza Horizon 2, and Sunset Overdrive — though these games won’t be VR games.
Volume was average for FB stock options on Thursday, with about 150,199 contracts changing hands. Calls were the vehicle of choice, as 68% of the day’s traffic crossed on the call side of the tape. Looking ahead of monthly June open interest, $80 could be a point of contention for FB stock. Currently, this strike is home to both peak call open interest (113,734 contracts) and peak put open interest (109,797 contracts).
Gilead Sciences, Inc. (GILD)
Why is GILD stock up 25% year-to-date? Nobody knows, says Evercore ISI’s Mark Schoenenbaum. But Schoenenbaum has his suspicions, including a $15 billion stock buyback authorization, dividend focused investors, and growing confidence in Gilead management. Gilead also made headlines this week as part of a bidding war for Receptos Inc. (NASDAQ:RCPT).
GILD has really taken off in the past month, soaring nearly 20% since the beginning of May. The stock is heading for a showdown at $120, however, and options traders are gearing up for the fight. In the June series, the $120 strike sports call open interest of 42,463 contracts, while a respectable 40,512 put contracts also reside at this overhead strike.
On Thursday, GILD calls were all the rage. Volume swelled to a near-term high of 279,658 contracts, with calls accounting for 77% of the day’s activity.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
