The major market indices finished relatively flat on Thursday, as a mix of economic data and low oil prices vied for dominance. July retail sales came in 0.6% higher than the month prior, though oil plunged to hover just above $42 per barrel as concerns of a supply glut plagued the commodity. Overall, the S&P 500 dipped 0.13% on the day.
Option volume slowed considerably on Thursday, arriving near mid-Summer levels even as calls began to gain some traction. For the day, the CBOE’s single-session equity put/call volume ratio moderated a bit, dipping to 0.74 after hitting a two-week high on Wednesday. The 10-day moving average continued its advance, however, rising to 0.76.
On the equity options front, Apple Inc. (NASDAQ:AAPL) came under fire for iPhone growth concerns for the second time this week after Bank of America Merrill Lynch issued a bearish research note. Elsewhere, Yahoo! Inc. (NASDAQ:YHOO) was upgraded at Bernstein, while Tesla Motor Inc (NASDAQ:TSLA) announced the sale of $500 million in new shares to finance growth.
Apple Inc. (AAPL)
After rebounding from support near $110, AAPL stock may find itself in trouble once again heading into the weekend. For the second time this week, the brokerage community has expressed concerns about flagging sales growth for the company’s flagship iPhone. On Wednesday, Jefferies lower its price target on AAPL to $130 from $135.
Following suit, Merrill Lynch reiterated a “neutral” rating and a price target of $130 for AAPL, hinting that sales expectations for the iPhone in China may be a bit on the inflated side. Specifically, Merrill noted that while Chinese population is expected to eclipse 1.4 billion this year, the addressable market is only a small fraction of this total figure.
On the options front, call volume has begun to falter once again for AAPL stock. On Thursday, just shy of one million contracts traded on AAPL with calls eeking out just 52% of the day’s take. Looking ahead to next week, peak August call open interest totals 102,764 contracts at the deep-out-of-the-money $130 strike, while peak put OI numbers 64,280 contracts at the in-the-money $120 strike.
Yahoo! Inc. (YHOO)
YHOO stock was also targeted by brokerage activity, which helped to drive options volume on the equity. Bernstein upgraded YHOO to “outperform” from “market perform” while maintaining a price target of $52 per share. According to Bernstein, Yahoo has plenty of potential upside in the coming quarters, in addition to its value as an indirect investment option for Alibaba Group Holding Ltd (NYSE:BABA).
Making a rare appearance on the top 10 most active options listing, YHOO saw more than 103,000 contracts changed hands on Thursday. Calls were by far the most popular option, accounting for 73% of the day’s total volume. Currently, peak August OI rests at the out-of-the-money $44 strike, totaling 10,811 contracts, while peak put OI totals 7,569 contracts at the in-the-money $37 strike.
Tesla Motor Inc (TSLA)
In a move to finance accelerated growth, Tesla announced that it will be offering $500 million in additional shares in a new public offering. CEO Elon Musk will reportedly be purchasing $20 million in common stock during this offering. In other news, TSLA was upgraded this morning from “hold” to “buy” at Vetr.
TSLA’s stock price has struggled in recent weeks, with the shares pulling back to support in the $240 region, which is currently home to the stock’s 200-day moving average. Options traders appear to be reluctantly betting on a bounce for TSLA, as call volume has crept higher during the past week.
On Thursday, TSLA saw volume of 117,037 contracts, with calls making up 52% of the day’s take. Looking ahead to next week’s August expiration, the $260 strike is home to peak put and call OI, but the $250 strike may offer up the real battleground for TSLA. Currently, 2,668 calls and 2,766 puts are open at the Aug $250 strike, all of which expire at the end of next week.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
