Tuesday’s Vital Data: Apple Inc. (AAPL), Tesla Motors Inc (TSLA) and Alibaba Group Holding Ltd (BABA)

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Wall Street bounced back from Friday’s losses to end modestly higher on Monday.  However, enthusiasm was limited, as traders weighed the prospects of a potential U.S. government shutdown. All in all, the Dow Jones Industrial Average led the way with a gain of 0.8%, while the Nasdaq Composite lagged, adding just 0.04%.

Light volume gave way to brisk call activity on Monday, as traders move to establish positions in the wake of September option expiration. As a result, as the CBOE’s single-session equity put/call volume ratio plunged to a three-month low of 0.55, dragging the 10-day moving average to a weekly low of 0.76.

On the equity front, volume was light for Apple Inc. (NASDAQ:AAPL) options, but calls gained favor following a bullish research note touting increased iPhone 6 demand. Options traders were divided on Tesla Motors Inc (NASDAQ:TSLA) after the company announced that its new Model X SUV would officially hit the street on Sept. 29, while Alibaba Group Holding Ltd (NYSE:BABA) attracted increased put activity after the stock’s post-IPO lockup period ended.

09-22-2015 Top Ten Options

Apple Inc. (AAPL)

While Apple’s Sept. 9 launch event was a flop with Wall Street, it was apparently a hit with teenagers. According to a research note from Baird, a survey of 1,500 teenagers found increased demand for the new iPhone 6s and 6s Plus. Citing Apple’s strong growth potential and increased iPhone demand, Baird reiterated its “outperform” rating on AAPL stock with a $155 price target.

As noted above, options volume came in light for AAPL, totaling just 627,685 contracts on Monday. Still, traders maintained their bullish bias, with calls snapping up 63% of the take.  

Immediate-term expectations for AAPL stock appear to be quite high, as there are heavy call accumulations at the out-of-the-money weekly Sep 25 $117 and $120 strikes, each totaling more than 22,000 contracts. Peak put OI for the weekly series, meanwhile, numbers roughly 18,000 contracts at the $108 and $109 strikes.

Tesla Motors Inc (TSLA)

The much-anticipated Tesla Model X has finally received an official delivery date. The first Model Xs will start shipping to customers on Sept. 29, and Tesla will be holding an event at its Fremont, California, plant to celebrate. TSLA stock has been volatile lately, with the shares relying solely on new product announcements and Model S delivery numbers for drivers. Model X deliveries should provide a positive sentiment boost for TSLA stock, should all go well.

Options traders on Monday appeared to be hedging their bets, however. Volume came in at a brisk 134,749 contracts, but activity was split down the middle between puts and calls. What’s more, options traders don’t appear to be expecting too much movement through the end of the week, with heavy weekly September OI centered on the at-the-money $260 strike — 2,254 put contracts and 2,036 call contracts. Weekly implieds are currently pricing in a move of plus or minus 3.5% through Friday’s expiration.

Alibaba Group Holding Ltd (BABA)

The hits keep coming for BABA stock. After finally finding its footing in the wake of a tumultuous couple of weeks in the Chinese market, BABA stock was smacked nearly 3% lower on Friday after the post-IPO lockup period ended on the shares. The end of such periods is often a volatile time for stocks, but with an influx of 63% of existing float (about 1.6 million shares) flooding into the market as potential free-trading stock, BABA has it worse than most.

Options traders, meanwhile, appear to be either already well prepared or biding their time. Volume following the end of the lockup period was a meager 114,010 contracts, arriving below BABA’s average over the past month. Puts were predictably popular, snatching up 54% of the day’s activity.

Looking at immediate-term expectations, peak weekly Sep 25 series call open interest currently rests well overhead at the $67 strike, totaling 5,537 contracts. Meanwhile, peak put OI for the same series numbers 8,156 contracts at the $60 strike. BABA stock has tested $60 several times since late August, and with resistance at its 10- and 20-day moving averages holding firm, another test or a potential breach is not entirely out of the question before week’s end.

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/tuesdays-vital-data-apple-inc-aapl-tesla-motors-inc-tsla-alibaba-group-holding-ltd-baba-options/.

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