U.S. stock futures are pointing toward a weak open this morning, as Wall Street once again eyes falling crude oil prices. After jumping 9% to hit a two-week high on Friday, crude futures have slipped more than 3% to trade below $32 per barrel in overseas trading. Additionally, trading volume could be low today thanks to the snow piled up on East Coast.
Heading into the open, futures on the Nasdaq Composite are off 0.33%, with S&P 500 futures down 0.29%, and Dow Jones Industrial Average futures lower by 0.36%.
In options activity, volume swelled across the tech sector, as traders jockeyed for positions ahead of a key quarterly earnings report from tech bellwether Apple Inc. (NASDAQ:AAPL). Checking in with the CBOE, the single-session equity put/call volume ratio slipped to 0.64, with the 10-day moving average fell to 0.82.
In equity option news, Apple saw a smattering of non-earnings news, as the company lost the head of its electric-car unit while hiring a new head of its virtual-reality unit. Meanwhile, Amazon.com, Inc. (NASDAQ:AMZN) also joins the parade of corporate earnings reports this week, while American Express Company (NYSE:AXP) beat earnings expectations on Friday but offered up guidance well below analyst targets.
Apple Inc. (AAPL)
Apple headlines over the past couple of days have provided a bit of a distraction from analyst concerns over iPhone unit sales. On one hand, Steve Zadesky, head of Apple’s electric-car project, is leaving the company after heading the much-discussed project for the past two years. On the other hand, Apple signaled a move into VR by hiring Doug Bowman to supervise VR-oriented research.
Neither headline is likely responsible for the flood of options activity, however. Instead, it’s almost certainly Apple’s upcoming earnings report, due out Tuesday after the bell.
AAPL stock saw an above-average 2 million contracts change hands on Friday, with a below-average relative call volume, which accounted for a mere 57% of total activity. With AAPL popping above $100 on Friday, some of this put action may have been buy-side-initiated in the form of married puts (puts purchased simultaneously with AAPL stock as a means of insurance).
Naturally, the $100 strike is the level to watch this week, as more than 45,000 AAPL Jan 29 series calls are open at this strike. Meanwhile, peak put open interest for this series totals some 9,000 contracts at the $95 strike.
Amazon.com, Inc. (AMZN)
Options volume came in strong for AMZN stock on Friday. Overall activity arrived at an above average 293,810 contracts, with calls accounting for 57% of total volume on the day. The weekly Jan 29 series $600 strike is certainly one to watch this week, with 1,475 contracts in open interest, but peak call OI for the series totals 1,907 contracts at the $620 strike, hinting at bullish expectations from the options crowd.
As for earnings, Wall Street is expecting earnings of $1.63 per share on revenue of $35.98 billion, up 22.7% year-over-year. EarningsWhisper.com places the whisper number at $1.70 per share.
American Express Company (AXP)
American Express’ fourth-quarter report started off solid, with profits of $1.23 per share topping estimates by 10 cents per share and revenue arriving in line at $8.4 billion. However, AmEx placed 2016 guidance at $5.40 to $5.70 per share versus estimates of $5.40, and said 2017 earnings would come in at the low end of prior guidance, near $5.60 per share.
AXP stock plunged more than 12% as a result, and options traders were quick to jump on the decline. Overall volume came in brisk at 272,000 contracts, with puts snagging 55% of the take. AXP is now hovering above key long-term support near $55. The shares are also trading south of all major call OI accumulations, while the 3,285 puts at the Feb 19 series $55 put is the last bastion of potential options-related support for the short-term.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
