U.S. stock futures are pointed sharply higher this morning, as Wall Street digests news that the U.S. Fed is poised to raise interest rates at the same time the European Central Bank is discussing additional easing action.
The news is also driving oil prices and energy stocks higher. At last check, futures on the Nasdaq Composite were up by 0.64%, while S&P 500 futures were up 0.55%, and Dow Jones Industrial Average futures were up 0.48%.
Options volume was brisk on Wednesday, as traders rushed to position themselves ahead of a potential interest-rate hike from the Fed. Over on the CBOE, the single-session equity put/call volume ratio rose slightly to 0.67, but the 10-day moving average extended its decline, falling to 0.68.
On the equity options front, Yahoo! Inc. (NASDAQ:YHOO) call speculation surged on Wednesday after the company’s board met to discuss a potential sale of core businesses. Elsewhere, Qualcomm Inc. (NASDAQ:QCOM) was also call heavy after signing a patent deal with Chinese phone maker Xiaomi. Finally, Kinder Morgan Inc (NYSE:KMI) rallied the bears after Moody’s cut its outlook on the company to “negative” from “stable.”
Yahoo! Inc. (YHOO)
Lots of reports were hitting the news wires for Yahoo! on Wednesday. The headline report was that Yahoo!’s board was meeting to discuss a possible sale of the company’s core business. Additionally, the board is also said to be discussing how to handle the company’s remaining interest in Alibaba Group Holding Ltd (NYSE:BABA). Finally, there are unsubstantiated rumors that Yahoo CEO Marissa Mayer could be ousted for not doing enough to turn the company around.
While YHOO is not a stranger to the top 10 most active options listing, it’s been a while since the stock has made an appearance. More than 172,000 contracts changed hands on YHOO on Wednesday, setting a short-term high for options activity on the shares. Calls were the overriding force for YHOO, accounting for 68% of all of Wednesday’s activity.
Turning to weekly December 4 series open interest, YHOO is currently trading north of all major open interest strikes, save the $36 strike. Peak OI totals 6,5011 contracts at the now in-the-money $34.50 strike, but 4,059 calls still remain overhead at the $36 strike. Heavy put OI could create a bit of a floor near $35, with 1,891 contracts currently residing at this out-of-the-money strike.
Qualcomm, Inc. (QCOM)
QCOM stockholders haven’t seen much, if any, good news recently. So, when the company announced that it has signed a patent license agreement with Chinese phone maker Xiaomi, QCOM bulls pounced on the news. Qualcomm has a history of struggling with antitrust suits, and the Xiaomi deal eases quite a few concerns for investors by paving the way with four of China’s five biggest phone makers.
Wednesday’s option volume was enthusiastic for QCOM stock. Some 128,600 contracts traded on the issue, with calls making up 68% of the total take. From an options support/resistance standpoint, QCOM is still facing 2,584 Dec. 4 call contracts at the $53 strike, while any semblance of options related support doesn’t emerge until $49.50, where 1,333 put contracts are open.
Kinder Morgan Inc. (KMI)
Oil and gas concern Kinder Morgan has had a rough start to the week when Moody’s Investor Services lowered its outlook from “stable” to “negative.” The issue re-emerged on Wednesday, after former El Paso Corp. shareholders won $171 million in damages arising from last year’s acquisition. What’s more, Wednesday’s plunge in oil prices also sent KMI shares skittering lower.
Options volume hit a record short-term high for KMI on Wednesday, with 124,837 contracts changing hands. Puts accounted for just over half of all of yesterday’s activity on KMI. With the stock breaking out to fresh annual lows near $20, options activity has shifted in that direction. Currently, KMI is looking at 1,379 put contracts at the $20 strike in the December 4 series, with 1,543 call contracts at the overhead $21 strike.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
