It’s time for a bit of bargain hunting on Wall Street this morning, as stocks bounce back from multi-year lows.
Despite jitters in Asian trading, stocks have gained stateside momentum, propelled by a nearly 5% rebound in oil prices following indications that OPEC may finally cut production.
On the economic front, January retail sales rose 0.2% (vs. .01% expected), while the consumer sentiment index and business inventories are due out later this morning.
Heading into the open, U.S. stock futures on the Nasdaq Composite are up 0.89%, while while Dow Jones Industrial Average futures are up 0.74% and S&P 500 futures are higher by 0.90%.
Equity option volume once again arrived below average on Thursday, with puts dominating the landscape as investors sought out protection against the plunge. On the CBOE, the single-session equity put/call volume ratio ballooned to a one-month high of 0.96, driving the 10-day moving average to its own monthly high of 0.79.
In equity options news, Bank of America Corp (NYSE:BAC) leads the way lower for the financial sector following cautious comments from the Federal Reserve on interest rates. Elsewhere, Apple Inc. (NASDAQ:AAPL) has apparently backed away from pursuing TV programming, according to CBS Corporation (NYSE:CBS). Finally, analysts are raising revenue questions on Netflix, Inc. (NASDAQ:NFLX) as the company faces the growing threat of black market accounts.
Bank of America Corp (BAC)
Back when the Fed was gung ho about raising interest rates, investors targeted Bank of America stock as a potential way to play the changing financial environment. With Fed Board Chair Janet Yellen’s all-but-dovish commentary this week on Capitol Hill, the picture has shifted a great deal. Facing the prospect of stalled rate hikes for the time being, BAC stock traders are quickly backing away from the shares.
Despite BAC’s pullback in recent days, options traders remain focused on BofA calls. In Thursday’s activity, total volume came in at an above average 1.5 million contracts, with calls snapping up 60% of the day’s take. That said, not all of this call activity appears to be of the buy-to-open variety, with many traders likely opting for buy-write positions on BAC as a way to offset their stock holdings.
Looking at the week ahead, BAC is staring up at 15,153 calls at the Feb. 19 series $12 strike, with another 40,228 at the $13 strike. On the put side, roughly 16,277 contracts are currently open at the $11 strike in the February series. As such, BAC could be range-bound next week, barring anymore major moves in the broader market.
Apple Inc. (AAPL)
While Amazon.com, Inc. (NASDAQ:AMZN) and Netflix are buying up content like its going out of style, Apple has apparently backed away from the table in TV streaming talks. In a conversation on CNNMoney, CBS CEO Les Moonves said that talks with Apple regarding content have stopped. “We had conversations a while back, and we haven’t had recent conversations with them,” Moonves said.
For regular Apple followers, the company’s on-again-off-again relationship with Apple TV comes as no surprise, but given that its leading competitors in the space are ravenously snapping up content, one can’t help but wonder if Apple isn’t falling too far behind to catch up at this point.
On the options front, lower total call volume has become the norm for AAPL stock. Total volume hit just north of one million contracts on Thursday, with calls sequestering about 58% of the take. Key levels to watch in the Feb. 19 series include the $5 strike, where 18,205 contracts are open, and the $92.50 put, which sports OI of 12,388 contracts.
Netflix, Inc. (NFLX)
Black market Netflix accounts may not be something you expected to read about — ever — but, according to a new report by security firm Symantec Corporation (NASDAQ:SYMC), the problem is real. Stolen Netflix accounts, acquired via phishing schemes, are showing up online and sold on the black market, undermining the company’s revenue. In the past, Netflix has been lenient with account sharing, but this new development may call that unofficial policy into question.
As with any news regarding Netflix’s revenue, the news was a blow to NFLX stock, sending the shares down nearly 3% on Thursday NFLX options activity, which had begun to rebound toward heavy call volume, stagnated in yesterday’s trading. Overall volume totaled just more than 331,000 contracts, with calls eeking out 52% of the take.
As for levels to watch in next week’s trading, NFLX call traders have focused on the Feb $90 strike, pushing open interest to 4,101 contracts. Peak call OI for the series, meanwhile, totals 25,222 contracts at the deep-out-of-the-money $110 strike, with these options clearly added well before the stock’s plunge in the past month. Put traders, meanwhile, have opened 16,983 contracts at the just out-of-the-money $80 strike.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
