Stocks finished flat-to-lower on Tuesday, as the major market indices closed just below breakeven. The S&P 500 remains in positive territory for the week, though just barely, as economic concerns and light Summer trading volume begin to take hold.
Options activity is also relatively light this week, facilitating sharp swings in the CBOE put/call volume ratio, which once again dipped sharply to end at 0.54 yesterday. The 10-day moving average pulled back from a two-week high to land at 0.62.
For evidence for the drought of activity this week, you need look no further that Wednesday’s most active options listings. Apple Inc. (NASDAQ:AAPL) volume was well below average, and while Alibaba Group Holding Ltd (NYSE:BABA) made headlines, the news wasn’t groundbreaking, with the company taking steps to expand its operations in Russia. Other notables on the list include Bank of America Corp (NYSE:BAC) and Coca-Cola Enterprises Inc (NYSE:CCE), with both stocks seeing relatively heavy call volume ahead of ex-dividend dates.
Alibaba Group Holding Ltd (BABA)
According to Russian newspaper Kommersant, Alibaba has opened an office in the country. China’s largest e-commerce firm said it is looking to expand existing operations in Russia, which has a rapidly expanding e-commerce market. Its Russian subsidiary was registered on May 15, and Alibaba appointed Mark Zayadsky as the head of operations.
Options trading on BABA was light for the session, despite the stock making yesterday’s most active options listing. Only about 86,066 contracts traded on BABA, with roughly 75% of that volume crossing on the call side of the tape. Looking at weekly options activity, peak open interest currently resides at the overhead weekly June 5 series $92.50 call strike, totaling 12,941 contracts. Another 5,095 contracts are open at the in-the-money June $91 call strike, while peak put open interest of 3,699 contracts is open at the June $90 strike.
Bank of America Corp (BAC)
BAC stock is set to trade ex-dividend today, meaning that yesterday was the last day for shareholders of record to be eligible for BofA’s 5-cent-per-share quarterly dividend, which is payable on June 26. With BAC trading at $16.55, the dividend yield currently arrives at 1.21%.
BAC’s technical backdrop has become quite complicated of late. The shares are battling short-term overhead resistance in the $16.50-$17 region, with BAC’s 10-day moving average complicating matters. BAC is currently perched on its 20-day moving average, with support just below at its 50-day trendline. In short, barring any significant news or market moves, BAC could be range-bound for the short-term.
On the options front, BAC saw respectable volume on Tuesday when compared to the rest of the session’s most actively traded stocks. Some 347,000 contracts traded on BAC, with 77% trading as calls. With the stock trading ex-dividend today, yesterday’s call volume was likely related to dividend capture strategies.
Coca-Cola Enterprises Inc (CCE)
CCE was another stock receiving relatively heavy ex-dividend related options activity. CCE trades ex-dividend today, with Coca-Cola Enterprises paying out a quarterly dividend of 28 cents per share on June 18. The current estimated annualized yield for CCE’s dividend comes in at 2.54%.
Technically, CCE stock is currently trading below all of its major short-term moving averages save its 200-day trendline. The shares hit a double-top near $46.50 in mid-May, and have pulled 10-day and 50-day moving averages into a bearish cross — a technical formation that often signals additional short-term losses.
As for CCE’s options activity, roughly 197,600 contracts traded on the stock, with 96% of the day’s volume trading as call contracts — likely related to dividend capture strategies. Looking at the June series, peak call open interest resides at the overhead $50 strike, where 8,563 contracts currently reside. On the put side, peak open interest totals 8,400 contracts at the $50 strike.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
