Thursday’s surge led to a rather quiet Friday session of trading, as the major market indices shed roughly a half-percent. The S&P 500 still managed to grind out its second weekly gain in a row, while the Nasdaq Composite ended its weekly losing streak at three weeks.
Options traders remain largely on summer break, with volume coming in slightly below average on the day. Overall, the CBOE equity put/call volume ratio arrived at 0.63, while the 10-day moving average held at 0.61 for the second day in a row.
Diving into Friday’s most actively traded options, despite a lack of headline news, Apple Inc. (AAPL) remains a favorite among options traders — though Taylor Swift’s spurning of Apple Music proved to be a thorn in Apple’s side. Elsewhere, Twitter Inc (TWTR) drew respectable volume following news of “Project Lightning,” a top-secret feature that will allow editors to end out summation tweets en masse. Finally, Netflix Inc. (NFLX) was targeted by bullish commentary from Wall Street analysts.
Apple Inc. (AAPL)
AAPL stock’s inability to break above short-term technical resistance hasn’t deterred options traders in the least during the past several weeks. While volume came in a bit below average at 784,742 contracts, calls still accounted for 57% of AAPL’s total volume on Friday.
Looking at weekly June 26 series open interest, AAPL options traders have zeroed in on the out-of-the-money $130 strike, which is home to more than 30,000 contracts in open interest. The in-the-money $127 strike arrives as the second most popular short-term contract, sporting open interest of 23,231 contracts.
While AAPL largely rode the waves of the broader market last week, Taylor Swift’s refusal to allow her latest album to stream on Apple Music was the big news over the weekend. Swift commands a significant and loyal following, so Apple didn’t take her lightly — the company responded to Swift’s threat to pull 1989 from Apple Music by agreeing to pay artists during an initial free trial period.
Twitter Inc. (TWTR)
While it remains to be seen if “Project Lightning” will reinvigorate Twitter’s revenue stream, news of the supposedly “top secret” move prompted TWTR stock to jump more than 3.5% on Friday. According to Buzzfeed, the news service will allow Twitter users to send out summation tweets of top content to mass users. The service will also have its own button on Twitter’s mobile app.
Option volume was brisk on TWTR Friday, with the 313,626 contracts trading on the stock arriving well above TWTR’s daily average. Furthermore, options traders appeared jazzed about the news, with 75% of Friday’s volume crossing on the call side of the tape.
Taking a look at the week ahead, Twitter traders have taken a liking to the in-the-money weekly June 26 series $36 call strike, which currently sports peak open interest of 14,416. The next most popular strike in the weekly June series is the out-of-the-money $37 call, where 6,296 contracts reside.
Netflix, Inc. (NFLX)
NFLX stock got a shot in the arm early on Friday, after Oppenheimer reiterated its “outperform” rating and lifted its 12-month price target to $800 per share from $610 per share. According to the research note, Oppenheimer made the move based on Netflix’s expansion plans, with the company moving into five new countries this year: Cuba, Italy, Japan, Portugal and Spain.
Option volume came in slightly above average for NFLX, with some 138,748 contracts changing hands on Friday. Calls held the majority of traffic, accounting for 61% of Friday’s volume. As for the week ahead, the out-of-the-money weekly June 26 series $700 call is home to peak open interest of 4,137 contracts, while another 3,835 contracts are open at the overhead $690 call strike. Put open interest for the series tops out at 2,993 contracts at the out-of-the-money $585 strike.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
