The major market indices dipped into the red on Tuesday, as worries over the release of minutes from the latest Federal Open Market Committee meeting overshadowed a strong New Residential Construction Report. As a result, the S&P 500 continued to bounce around 2,100, falling 0.26% on the day.
Option volume evaporated in the Summer heat on Tuesday, despite the pending expiration of monthly August options this Friday. Overall, the CBOE’s single-session equity put/call volume ratio fell to 0.66, dragging the 10-day moving average from its three-day stint at annual highs to rest at 0.75.
In stock options activity, Apple Inc. (NASDAQ:AAPL) topped Tuesday’s most actives list following news that the company had raked in record sales from its App Store. Meanwhile, Facebook Inc (NASDAQ:FB) call options were popular after MKM Partners boosted its price target on FB stock. Finally, Wal-Mart Stores, Inc. (NYSE:WMT) leaped onto the most active options listing following a poorly received quarterly earnings report.
Apple Inc. (AAPL)
AAPL stock slipped 0.56% on Tuesday, but managed to hold its recent perch above its 10-day moving average on the session. The shares faltered due to broad-market selling, which overshadowed news that Apple App Store sales hit a record $1.7 billion in the month of July. According to Apple, most of the store’s growth came from China, but the company abstained from disclosing any exact figures.
Despite topping the most active options listing, volume was anemic for AAPL options. Only about 528,393 contracts traded on the stock — nearly half AAPL’s daily average during the past month. Calls remained the most popular contracts, accounting for 54% of Tuesday’s total volume.
Looking at monthly August option expiration, there is a wealth of put open interest just below AAPL stock, with 60,980 contracts currently open at the $115 strike. By comparison, overhead call OI is thin, with 20,173 contracts at the just-overhead $116 strike. As such, options-related support could materialize at $115 heading into the weekend.
Facebook Inc. (FB)
FB stock rose 1.32% on Tuesday, pushing the shares back above their 10-day and 20-day moving averages. Helping to drive activity on the stock, MKM Partners boosted its price target on FB stock to $120 from $105 citing “higher user potential.” Additionally, the brokerage noted that Instagram is on the verge of becoming “a cash cow” for Facebook.
In options activity, FB saw 263,427 contracts change hands on Tuesday. Calls once again dominated the landscape, accounting for 71% of all FB options volume yesterday. As for August expiration, FB stock traders will want to keep a close eye on the $95 level, as it is home to some 45,143 call contracts that are set to expire at the close on Friday. As a result, FB could have a bit of a battle to overcome potential options-related resistance at the strike through Friday.
Wal-Mart Stores, Inc. (WMT)
WMT stock plunged more than 3.3% on Tuesday as stockholders panned the company’s second-quarter earnings report. Walmart said it earned $1.08 per share in the quarter, with revenue arriving at $120.2 billion. While revenue edged past estimates for $119.7 billion, earnings fell short of expectations for $1.12 per share. Furthermore, the company guided third-quarter and full-year earnings below consensus expectations.
Options activity was brisk, by WMT’s standards, with volume totaling 106,035 contracts. Calls edged out puts on the day, accounting for 53% of the take on Tuesday. Currently, WMT is staring up at 6,635 Aug $70 strike call contracts, which are set to expire at the end of the week, while 12,121 $70 strike put contracts are now trading in the money after yesterday’s decline.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
