It looks like Wall Street will be selling into the weekend today, as U.S. stock futures are trading lower heading into the open. The major market indices shed roughly 1.4% yesterday, and futures are indicating that sellers are not finished quite yet. At last check, U.S. stock futures are headed higher in premarket trading. At last check, futures on the Nasdaq Composite were off 0.28%, while futures on the Dow Jones Industrial Average and the S&P 500 Index were down about 0.14%.
Option volume was quite brisk on Thursday, with General Electric Company (NYSE:GE) once again dominating activity as the hours ticked down to the deadline for shareholders to agree to a swap for Synchrony Financial (NYSE:SYF) stock. Despite the popularity of GE calls, puts were once again in favor on Thursday. In fact, the CBOE single-session equity put/call volume ratio rose to a fresh four-week high of 0.83 yesterday, sending the 10-day moving average jumping to a two week high of 0.69.
Turning toward equity options activity, MannKind Corporation (NASDAQ:MNKD) came roaring back on Thursday after the company confirmed that MNKD shares will be listed on the Tel Aviv stock exchange. Elsewhere, HSBC Securities lifted its price target on Exxon Mobil Corporation (NYSE:XOM), while Cisco Systems, Inc. (NASDAQ:CSCO) is getting beaten up in premarket activity after offering weak second-quarter guidance.
MannKind Corporation (MNKD)
MNKD stock regained most of its post-earnings losses on Thursday, after the company announced that its stock would be listed on Israel’s Tel Aviv stock exchange. MNKD stock took a severe hit following earnings after the company said it was selling stock to select Israeli investment firms, raising dilution fears among stockholders. The Tel Aviv listing means that many investment firms will now be required to hold MNKD stock, meaning that MannKind will be selling into a market with guaranteed buyers.
Call option traders were out in force for MNKD on Thursday. Overall volume jumped to a near-term high of 341,968 contracts, with call accounting for a whopping 74% of yesterday’s take. Looking ahead to November expiration next week, MNKD traders will want to keep a close eye on the $2.50 strike call, with 11,862 contracts, and the $3.50 put, with 17,907 contracts. Any meaningful break with these levels could see the beginning of a trend for MNKD stock.
Exxon Mobil Corporation (XOM)
XOM stock stumbled nearly 3% on Thursday, despite analysts at HSBC Securities lifting their price-target on the shares to $86 per share. Exxon stock has taken a hit this week as Wall Street digests the potential impact of higher interest rates from the Fed. Technically, the stock is in danger of breaking key weekly support at $80 — a level XOM has not closed a week below since Oct. 9.
XOM options have been unusually popular during the past couple of weeks, with the stock making several appearances on the daily top 10 most active options listing. On Thursday, puts dominated the landscape, accounting for 90% of the 292,790 contracts changing hands on XOM. For next week’s November expiration, heavy put OI is centered at the $80 strike, totaling 13,878 contracts, while call traders are focused on the $82.50 strike, sporting OI of 19,195 contracts. If XOM can hang within striking distance of $80 through next Friday, the shares could have a chance as maintaining support in the region.
Cisco Systems, Inc. (CSCO)
First-quarter earnings weren’t so bad for Cisco Systems. The company posted a profit of 59 cents per share for the quarter, topping both the Street’s estimate and the whisper number. However, CSCO stock lost all that good will by placing second-quarter guidance at between 53 cents and 55 cents per share — well below the consensus estimate for 56 cents per share.
Cisco stockholders already concerned about growth and slowing capital expenditures didn’t take new slack guidance well, and CSCO stock is down nearly 6% in premarket trading. Call options had a slight advantage heading into last night’s report, accounting for 55% of the 186,691 contracts trading on Cisco stock, but puts appear to be smart money heading into the open.
With CSCO trading near $26.25, some 9,600 weekly Nov 13 series $27 strike puts are set to open in the money, alongside roughly 7,000 $26.50 puts in the same series. Meanwhile, the 2,781 $27 strike calls and $26.50 strike calls are in danger of expiring out of the money this afternoon if CSCO doesn’t recover.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
