Stocks finished flat to lower on Wednesday, as Wall Street waited for Greece to approve the austerity measures necessary for a fresh EU bailout. As a result, the S&P 500 dipped a fraction of a percent on the day, but futures are headed higher in premarket trading after the Greek Parliament passed the needed measures for its bailout this morning amid much turmoil.
A fresh round of corporate reports drove options volume to short-term highs for the summer. Greek trepidation crept into the activity, however, with the single-session CBOE equity put/call volume ratio edging higher to 0.68. The 10-day moving average extended its recent slide to rest at 0.68.
In equity news, options activity was all about second-quarter earnings. Driven by a stronger-than-expected Q2 report, Bank of America Corp (NYSE:BAC) ousted Apple Inc. (NASDAQ:AAPL) from the top spot on Wednesday’s most active options table, while speculation ahead of Netflix, Inc.’s (NASDAQ:NFLX) better-than-expected quarterly report made it a serious challenger for the top spot on record short-term volume. Finally, Intel Corporation (NASDAQ:INTC) was also the target of heavy call volume ahead of the chipmaker’s trip to the earnings confessional.
Bank of America Corp (BAC)
For the past several weeks, BAC stock has lagged just behind AAPL stock in terms of volume on our daily top 10 most active options listing. After Bank of America surprised investors with its second-quarter earnings report yesterday morning, BAC options traders flooded the exchanges with activity, ousting AAPL from the top spot. For the record, Bank of America said that earnings more than doubled during the quarter, and placed guidance above current consensus targets.
BAC stock jumped more than 3% to close at $17.69 following the report, placing the stock above peak July series put and call open interest levels at the $17 strike. The $18 strike is the next potential hurdle, with 66,677 calls open in the July series and another 139,636 contracts open here in the August series. The $18 region is also home to technical resistance, so traders will want to keep a close watch on BAC as it nears this key point.
Netflix Inc. (NFLX)
It’s been an eventful 12 hours for NFLX stock. The shares underwent a 7-for-1 stock split after the close yesterday, and this morning, Netflix posted blowout Q2 earnings results. For the quarter, Netflix said it earnings 6 cents per share on revenue of $1.64 billion, topping Wall Street’s expectations for 4 cents per share of revenue of $1.6 billion.
Subscriber growth was the icing on the cake, with Netflix reporting more than 42 million U.S. and 23 million international subscribers — representing growth of 3.3 million subscribers during the quarter.
After falling more than 2% ahead of the report, NFLX stock is up nearly 11% in premarket trading. Options traders were speculating heavily ahead of the move, with a whopping 469,841 contracts changing hands on NFLX stock on Wednesday. Indecision was the name of the game, however, as volume was split 50/50 between calls and puts.
Calls were clearly smart money, and NFLX is trading north of $108 heading into the open this morning. As a result, the 15,711 contracts open at the July 107.14 strike (and the pre-split NFLX Aug $750 strike) are now solidly in the money.
Intel Corporation (INTC)
While INTC stock is receiving much less fanfare from the financial press this morning, Intel also reported better-than-expected second-quarter earnings. Profit fell 3% to 55 cents per share on revenue of $13.2 billion, but the results topped Wall Street’s target for earnings of 50 cents per share on revenue of $13.04 billion. INTC stock has pared some of its gains heading into the open, however, as the company forecast that third-quarter earnings would be flat to 1% lower year-over-year.
Options volume was brisk for INTC stock, with more than 282,000 contracts crossing the tape — a short-term record for the stock. That said, speculators were nonplussed with Intel’s prospects, as puts (which are typically bearish in nature) accounted for 65% of INTC’s total volume on the day.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
