Greece was once again front and center in Thursday’s session, with the major market indices rallying on news of an approved debt deal. Wall Street quickly turned its attention to a slew of second-quarter earnings reports, including blowout performances from Netflix, Inc. (NASDAQ:NFLX) and Bank of America Corp (NYSE:BAC). On the day, the S&P 500 added nearly 1%, placing the index on course to end the week at its highest perch since mid-May.
Despite strong performance among stocks, options traders appeared to be hedging their bets a bit on Thursday. Overall, the single-session CBOE equity put/call volume ratio rose again to 0.71, nudging the 10-day moving average higher to 0.69.
In equity action, NFLX stock saw record options volume on Thursday, ousting both BofA and Apple Inc. (NASDAQ:AAPL) from the top slot on the daily most active options listing. And speaking of AAPL stock, options traders rushed to position themselves ahead of next week’s second-quarter earnings report from the Cupertino-based darling.
Finally, eBay Inc (NASDAQ:EBAY) made a rare appearance on the most active options listing in the wake of the company’s strong quarterly earnings report.
Netflix, Inc. (NFLX)
For a second day in a row, NFLX stock attracted heavy options volume. In fact, a record 1 million contracts traded on NFLX, with calls accounting for 54% of the day’s total volume. Profit taking was the likely culprit for Thursday’s action, as NFLX stock surged more than 18% following blowout subscriber growth and strong international revenue growth.
Another likely driver for NFLX options volume was position roll-outs or additions in the soon-to-be front-month August series. Monthly July options expire at the close of trading today, shifting focus to August, where peak open interest currently resides at the $110 put, numbering 6,858 contracts. Another 6,780 contracts are also open at the out-of-the-money $100 strike put.
Apple Inc. (AAPL)
Gadget guru Apple will step into the earnings limelight after the close of trading on Tuesday, but options traders are already rushing to place bets on the stock’s reaction. According to EarningsWhisper.com, the consensus is expecting a profit of $1.79 per share, while the whisper number rests much higher at $1.93 per share. Apple has a history of lowballing its guidance figures and topping Wall Street’s estimates, so another earnings beat is likely in the cards.
Options volume has emerged from the Summer doldrums for AAPL stock this week, topping 865,000 contracts on Thursday alone. The bullish bias also remains in effect, with calls accounting for 61% of Thursday’s volume.
That said, the total put/call open interest ratio for AAPL has edged higher of late, as puts are added at a faster rate than calls, despite higher call volume. Currently, this ratio rests at 0.74, which signals a bit of pessimism from the speculative bunch heading into Apple’s quarterly report.
EBay Inc (EBAY)
EBay released its final quarterly report ahead of its pending spinoff of PayPal (PYPL). In fact, PayPal stock will begin trading as a separate entity come Monday morning. By the numbers, both earnings and revenue topped expectations, with the latter rising 7% to $4.38 billion.
That said, PayPal appeared to be responsible for much of eBay’s success, with net total payment volume rising 20% to $66 billion. PayPal’s growing contribution to eBay’s bottom line have led many to believe that this may be the last strong quarter for eBay for a while.
In the options pits, traders were slinging calls for all they were worth. EBAY volume swelled to 126,545 contracts on Thursday, with calls gobbling up 83% of the day’s activity. Currently, options traders have zeroed in on the Aug $62.50 call, which is home to 18,412 contracts. Additionally each of the $65, $67.50, and $70 strikes sport open interest in excess of 11,000 contracts. By comparison, peak August put open interest totals just 7,063 contracts at the 55 strike.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
