Thursday’s Vital Data: Netflix, Inc. (NFLX), Alibaba Group Holding Ltd (BABA) and Ford Motor Company (F)

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The Greek debt debacle continued to drive volatility on Wall Street on Wednesday, with the major market indices shedding nearly 1% across the board yesterday. Adding to the mix was another bout of profit taking, as stocks continue to hover just below multiyear highs. For its part, S&P 500 pulled back from all-time highs, but held above the 2,100 level on the day.

Options volume swelled on Tuesday, with activity returning to pre-Summer levels for the session. Overall, the CBOE equity put/call volume ratio fell to a two-week low of 0.52, while the 10-day moving average rose to 0.61.

In equity news, Netflix, Inc. (NASDAQ:NFLX) drew heavy speculation from options traders after the company’s board approved a 7-for-1 stock split. Elsewhere, Alibaba Group Holding Ltd (NYSE:BABA) strengthened its stance on copyright infringement by signing a Memorandum of Understanding with the International Publishers Copyright Protection Coalition in China. Finally, Ford Motor Company (NYSE:F) made a rare appearance on the most active options listing after Goldman analysts upgraded the stock.

Let’s take a closer look at all three of these stocks and their options magnetism.

06-25-2015 Top Ten Options

Netflix Inc. (NFLX)

The move had been rumored for a while, but on Tuesday night, Netflix board members officially approved a 7-for-1 stock split. NFLX stock tagged an all-time high of $706.24 on Wednesday, but reversed course shortly after billionaire investor Carl Icahn said his firm had sold its remaining position in Netflix. Reports put Icahn’s profit at at least $1.6 billion in three years on its NFLX stock position.

NFLX stock options volume jumped on the news, with the shares seeing heavy activity for the second day in a row this week. Wednesday’s volume swelled to a near-term record of 281,839 contracts, with calls accounting for 52% of the day’s activity.

Taking a look at weekly June 26 series open interest, peak OI totals 6,701 contracts at the $700 call strike, while another 5,581 contracts are open at the overhead $690 strike. Looking out to back-month strikes, NFLX traders should be aware that the stock will likely be targeted by heavy arbitration options activity as details of the stock split emerge.

Alibaba Group Holdings Ltd (BABA)

In a move the company probably hopes will reassure investors that it is clamping down further on illegal activities on its websites, Alibaba has signed a Memorandum of Understanding with the International Publishers Copyright Protection Coalition (IPCC) in China. The new memorandum strengthens one signed in August 2011, and pledges that the two parties will work closely together to fight infringement on global retailing site AliExpress and Taobao Marketplace, China’s largest online shopping portal.

Options activity has held relatively steady on BABA stock recently, though Wednesday’s volume arrived at an anemic 84,955 contracts. Despite the lower-than-average volume, call activity remained front and center, with these typically bullish bets accounting for 69% of Wednesday’s volume.

Looking ahead to next week, BABA options traders are focused on the overhead weekly July 3 series $87 strike, which currently sports peak open interest of 10,261 contracts. Other notable strikes include the $90 and $88.50 calls, which both sport OI of more than 3,500 contracts each.

Ford Motor Company (F)

F stock options were unusually popular on Wednesday, with 59,396 contracts changing hands on the American automaker. Furthermore, intentions appeared bullish, with calls accounting for 73% of the day’s activity. Driving options activity was an F stock upgrade to “buy” from “neutral” at Goldman.

Despite the overall preference for calls on Wednesday, F stock’s weekly July 3 series is dominated by put activity. Specifically, 9,079 contracts are currently open at the out-of-the-money $13.50 strike, which represents peak open interest for the series. The nearest contender on the call side is the at-the-money $15.50 strike, which sports OI of 5,155 contracts.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/06/thursdays-vital-data-netflix-inc-nflx-alibaba-group-holding-ltd-baba-ford-motor-co-f-options/.

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