Wall Street saw heavy selling across the board on Wednesday. Fear slithered back into the market as Chinese efforts to support stocks appear to have fallen short, while a temporary shutdown of the NYSE exacerbated matters. The S&P 500 finally closed beneath its 200-day moving average, to finish at its lowest point since March.
Options traders echoed Wall Street’s fears, sending the CBOE single-session equity put/call volume ratio soaring to 0.87. As a result, the 10-day moving average lept to another annual peak of 0.73.
Equity news on Wednesday’s most active options was rather mild in comparison to global events. Apple Inc. (NASDAQ:AAPL) was targeted by another bullish research note, with Canaccord Genuity lifting its iPhone 6 sales expectations. Meanwhile, Facebook Inc (NASDAQ:FB) appears to be on the cusp of testing out a new music service, and research firm Market Realist pointed out that General Motors Company (NYSE:GM) could see lower earnings due to a strong U.S. dollar.
Apple Inc. (AAPL)
Canaccord Genuity joined the growing number of brokerage firms coming out recently in support of AAPL stock. On Wednesday, Canaccord lifted its third-quarter iPhone 6 unit sales estimates from 47.1 million to 50.5 million. The brokerage firm also reiterated its “buy” rating on the firm with a $160 price target. With Apple’s trip to the earnings confessional less that two weeks away, we can expect more analysts to weigh in, and soon.
Options activity remained brisk on AAPL stock on Wednesday, with more than 1.1 million contracts trading on the equity. Calls held a slight edge, comprising 59% of yesterday’s activity, but put open interest is slowing gaining ground. In fact, AAPL’s total put/call open interest ratio has risen lately to a reading of 0.74, with put open interest coming up just shy of call open interest. For AAPL stock, which is typically a bullish favorite in the options pits, this is a development worth watching.
Facebook Inc (FB)
According to music news website Music Ally, Facebook is in early talks with major labels to launch its own music streaming service to compete with the likes of Google Inc (NASDAQ:GOOG, NASDAQ:GOOGL) and Apple. An ad-supported trial of the service is expected to be tested soon, focusing on music videos, but the report goes on to say that Facebook is looking at expanding toward an on-demand music service.
Pressured by broad-market selling, FB stock has pulled back from recent highs near $90 during the past week, but options traders appear unperturbed. The stock saw options volume of 181,948 contracts on Wednesday, with calls accounting for 68% of the day’s activity. Currently, peak open interest for the weekly July 10 series totals 8,211 contracts at the overhead $88 call strike. Following at a distant second is the in-the-money $86 call strike, with 6,536 contracts.
General Motors Company (GM)
By all accounts, GM has had a rough week, with the stock plunging nearly 20% in the past seven days. Capping this run lower, GM stock shed more than 5% on Wednesday after research and analytics firm Market Realist noted that sustained strength from the U.S. dollar could have a considerably negative impact on GM second-quarter earnings. Earnings at fellow automaker Ford Motor Company (NYSE:F), another stock on today’s most actives listing, were also mentioned as coming under pressure from the strong dollar.
Whether it was optimism or protection for short positions, GM stock options traders were call heavy on Wednesday. Of the 115,062 contracts trading on GM, 66% were of the call variety. Despite the added volume for calls, peak weekly July 10 series open interest lies with the puts, as 1,863 of these typically bearish contracts reside at the in-the-money $33 strike. Peak call open interest, meanwhile totals 1,687 contracts at the out-of-the-money $32.50 strike in the July 10 series.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
