The major market indices edged higher on Wednesday, as stocks looked to turn positive for the week. The S&P 500 lightly padded its weekly gain, though the broad-market barometer is still facing stiff resistance near $2,120. Options activity appeared uncahritaristly optimistic on Wednesday, with the CBOE put/call volume ratio plunging to a two-month low of 0.51. The 10-day moving average came in at 0.62.
Equity news remained considerably light, and overall options volume followed suit. In the social media sector, bullish comments from JPMorgan on LinkedIn Corp (NYSE:LNKD) bolstered sector peer Facebook Inc (NASDAQ:FB), which continues to see strong call volume. Elsewhere, Delta Air Lines, Inc. (NYSE:DAL) was hit with a flood of call activity after plunging earlier in the week on lowered passenger revenue guidance.
Finally, oil sector stocks remained under pressure as oil production rose to a new record high, sparking a rise in option activity for Chesapeake Energy Corporation (NYSE:CHK).
Facebook Inc (FB)
Facebook, Twitter Inc (NYSE:TWTR) and other social media stocks rode LinkedIn’s coattails on Wednesday after analysts at JPMorgan added LNKD stock to the brokerage firm’s U.S. focus listing. While JPMorgan said it believes LNKD is “the most actionable name in their coverage universe,” options traders chose instead to zero in on FB stock, sending volume of nearly 300,000 contracts across the tape yesterday.
Taking a closer look, FB options traders appeared to be mostly positive, with 71% of the day’s volume trading on the call side. But while call activity is marching higher for FB stock, peak weekly June 5 series open interest still resides at the out-of-the-money $75 put strike, totaling 14,494 contracts. Arriving at a distant second for the week is the in-the-money $80 call strike, which sports open interest of 9,435 contracts.
Delta Air Lines, Inc. (DAL)
After plunging to oversold levels early in the week, DAL stock was a call favorite in the options pits on Wednesday. Delta shares saw 118,282 contracts change hands yesterday, with 95% of that volume crossing on the call side. Several large block trades crossed near midday for DAL, with the largest being 30,000 contracts trading at a bid price of 30 cents on the Sep $55 strike, according to data from Trade-Alert.
DAL stock had come under fire earlier in the week after Delta reported that passenger revenue per seat-mile fell 5.5% in May. DAL also lowered guidance for this metric to decline by about 4% to 5% for June.
Chesapeake Energy Corporation (CHK)
Like the rest of the oil sector, CHK stock dropped sharply Wednesday, shedding 3.49% on the day following reports that U.S. crude inventories fell, but oil production rose to record levels. Record-low oil prices have been a major problem for oil and gas concerns like Chesapeake Energy this year, and CHK stock is down more than 30% year-to-date as a result.
Despite the decline, CHK stock options traders favored calls Wednesday. Volume swelled to 114,380 contracts, with 57% of the day’s activity trading as call contracts. Weekly June 5 series activity appears to have a bullish bias as well, with peak open interest totaling 10,190 contracts at the out-of-the-money $14.50 strike. On the put side, both the $13.50 and $14 strikes sport more than 4,000 contracts in the weekly June 5 series.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
