Thursday’s Vital Data: General Electric Company (GE), Netflix, Inc. (NFLX) and Hewlett-Packard Company (HPQ)

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The major market indices rallied on Wednesday, as fears of a Fed rate hike dwindled.  In fact, futures were pricing in a less-than-30% chance of the Fed raising interest rates at their policy meeting later today. Cheered by the prospects of one more month of essentially free money, the S&P 500 rallied 0.87% while the Dow Jones Industrial Average rose 0.84%.

In the options pits, volume fell off sharply on Thursday, as traders appeared to have already locked in their bets ahead of today’s policy decision. Overall, the CBOE’s single-session equity put/call volume ratio fell to a one-week low of 0.73, while the 10-day moving average held at a one-week high of 0.78.

In equity options news, General Electric Company (NYSE:GE) saw record short-term call volume after Credit Suisse added the stock to its “U.S. Focus List.” Meanwhile, Netflix, Inc. (NASDAQ:NFLX) drew call volume following a technical breakout, and Hewlett-Packard Company (NYSE:HPQ) stock jumped sharply after announcing layoffs ahead of its three-way company split.

09-17-2016 Top Ten Options

General Electric Company (GE)

GE stock rose nearly 2.5% on Wednesday after Credit Suisse reiterated an “outperform” rating and a $31 per share price target. The brokerage firm also added GE to its “U.S. buy list,” stating that there were a “significant” number of catalysts that could drive GE stock to the $28-$29 region.

While volume was rather anemic across the board on Wednesday, GE saw record short-term activity. Overall, some 252,000 contracts changed hands on GE yesterday, and calls snapped up a weighty 81% of the day’s take. Heading into Friday’s September options expiration, traders will want to keep a close eye on the overhead $26 strike, as it is home to more than 28,000 call contracts and 25,000 put contracts.

Additionally, should GE manage to top the $26 level, $27 could be a major short-term hurdle through Friday’s close. Currently, call OI at $27 totals a whopping 50,582 contracts, creating the potential for options-related resistance at this strike.

Netflix, Inc. (NFLX)

NFLX stock charged nearly 5% higher on Wednesday, with traders looking to snap the shares up as they once again broke back above the psychologically significant $100 mark.  Furthermore, NFLX also reclaimed its 10-day trendline — a moving average the shares had not closed a session above since Aug. 31.

With technical traders back in the market for NFLX stock, NFLX calls also joined the fray.  Volume was just above average for NFLX on Wednesday, with nearly 225,000 contracts trading on the session. Calls made up some 57% of the day’s activity.

Looking toward September option expiration, levels to watch for NFLX include the $105 and $110 strikes. OI for the $105 strike currently totals 5,378 calls and 5,197 puts. If the shares stagnate, it could be due to option pinning at $105. That said, the $110 strike holds an even heavier OI hand, with 6,380 calls and 5,122 puts. Either way, NFLX may have a hard time making additional heady prior to expiration.

Hewlett-Packard Company (HPQ)

HPQ stock joined Wednesday’s rally, gaining nearly 5% after Hewlett-Packard announced that it was cutting 30,000 to reduce expenses. These cuts are the latest in the company’s restructuring plans as it moves toward splitting HP into three companies: one for printers, one for computers and one for business enterprise.

Volume was above-average for HPQ, but with volume of 115,407 contracts, the stock may have only made the list due to Wednesday’s low volume. Overall, calls accounted for 53% of HPQ’s total volume.  

Currently, HPQ has some breathing room in terms of September open interest levels. The stock is trading just north of peak call OI of 20,197 contracts at the $28 level, while peak put OI is well below the shares, totaling 26,788 contracts at the $26.50 strike.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/09/thursdays-vital-data-general-electric-company-ge-netflix-inc-nflx-hewlett-packard-company-hpq-options/.

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