The major market indices surged on Wednesday, with the S&P 500 logging its best gains in a month following news that Germany is getting involved in the Greece debt situation. Rebounding stocks led to a flood of bullish activity in the options pits, even if overall volume was a bit below average. On the day, the CBOE put/call volume ratio plummeted to a year-to-date low of 0.46, while the 10-day moving average dipped to a two-month low of 0.59.
On the equity front, Apple Inc. (NASDAQ:AAPL) remains in focus as product updates and services launches continue to flow out of the ongoing WWDC 2015. Elsewhere, Netflix Inc. (NASDAQ:NFLX) surged after the board of directors increased the company’s share authorization — a move seen as a first step toward a stock split.
Finally, Intel Corporation (NASDAQ:INTC) launched an investment fund for technology startups led by women and minorities.
Let’s dive into the options action and what Wall Street might be thinking about these three blue-chip stocks.
Apple Inc. (AAPL)
WWDC kicked off this past Monday, and Apple updates have flowed across Wall Street in as the conference trudges on. So far, Apple has announced software updates to OSX, iOS, and the Apple Watch. The biggest piece of news so far has been the launch of Apple Music, though the service has been widely expected for some time now.
As a nod to how lackluster the event has been, AAPL stock could be headed toward its second weekly loss in a row, with the shares trading back below former resistance at $130. And while call activity remains elevated, comprising 62% of yesterday’s volume, total volume on Wednesday was a below average 690,068 contracts.
Looking at the soon-to-expire weekly June 12 series, out-of-the-money calls remain extremely popular for AAPL options traders. Peak call open interest for the series totals 49,642 contracts at the $133 strike, while another 40,103 contracts are open at the $130 strike.
The $130 level could still be in play for the end of the week, however, with AAPL adding more than 1% on Wednesday and gaining ground in premarket trading this morning.
Netflix, Inc. (NFLX)
NFLX stock has its eye on the $700 level, with shares jumping nearly 4% on Wednesday, bringing the stock’s year-to-date gain to more than 100%. The latest news on Netflix has investors speculating on a potentially massive stock split, as the company’s board approved an increase in Netflix’s share authorization to 5 billion shares. Many on Wall Street see this as the first step toward a potential stock split, especially since Netflix has said it wants to make its shares more readily available to more investors.
Option volume swelled to a near-term peak on NFLX stock yesterday, with more than 245,000 contracts changing hands. Calls were moderately popular, accounting for just 54% of Wednesday’s total volume. That said, put open interest dominates NFLX’s short-term landscape, with peak weekly June 12 series open interest totaling 2,762 contracts at the out-of-the-money $670 put strike. Peak call open interest, meanwhile numbers 2,232 contracts at the $700 mark.
NFLX stock was last seen higher by roughly 0.6% in premarket trading.
Intel Corporation (INTC)
Intel announced on Wednesday that it is launching a $125 million investment fund for tech startups led by women and minorities. INTC believes it can build a more diverse ecosystem for Silicon Valley, and this move brings the company’s total commitment to more than $300 million targeted at tech startups.
Option volume was average for INTL stock on Wednesday, with 114,753 contracts traded. Puts were the vehicle of choice, however, with 52% of yesterday’s volume trading on the put side of the coin. In fact, puts dominate the weekly June 12 series landscape for INTC stock. While peak open interest for the series totals 16,712 call contracts at the $32 strike, both the $31.50 and $31 put strikes sport open interest in excess of 11,000 contracts.
With INTC trading near $32, these puts could be part of a bull put spread (i.e. credit spread). If so, yesterday’s nearly 2% rally and this morning’s premarket gain of 0.57% are welcome sights.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
