U.S. stock futures are pointing toward a negative open this Friday morning, as Wall Street frets over January inflation data due out later this morning. Furthermore, yesterday’s U.S. crude stockpiles showed record high levels, pushing oil back down to the $30 per barrel region.
Heading into the open, futures on the Dow Jones Industrial Average are down 0.3%, while S&P 500 futures are off 0.3% and Nasdaq Composite futures are lower by 0.35%.
Equity option volume was brisk and weighted toward exchange-traded funds on Thursday, as traders looked for a little protection ahead of further signs of a weakening U.S. economy. Checking in with the CBOE, the single-session equity put/call volume ratio headed higher once again on Thursday, arriving at 0.75. The 10-day moving average, meanwhile, continued lower to rest at 0.8.
In equity options news, Apple Inc. (NASDAQ:AAPL) options volume was muddled after the company announced a software patch to fix bricked “error 53” iPhones. Meanwhile, General Electric Company (NYSE:GE) options volume ramped up ahead of the company’s ex-dividend date. Finally, Barrick Gold Corporation (USA) (NYSE:ABX) saw record option volume after announcing plans to slash debt by $2 billion this year.
Apple Inc. (AAPL)
Apple released a new software update yesterday to “un-brick” iPhones incapacitated by the now infamous “error 53.” The error, rolled out with the prior update, bricked iPhones that had been repaired by third-party vendors — a move that sparked a class-action lawsuit against Apple.
Apple also issued a formal apology:
“We apologize for any inconvenience, this was designed to be a factory test and was not intended to affect customers. Customers who paid for an out-of-warranty replacement of their device based on this issue should contact AppleCare about a reimbursement.”
Option volume appeared more closely tied to broader market concerns, however, as call volume dipped significantly on Thursday. Roughly 1 million contracts changed hands on AAPL stock, with calls accounting for a below average 53% of the day’s take. With February expiration looming at the close today, AAPL options traders should keep a close eye on the 8,500 calls and 9,900 puts currently open at the Feb $96 strike.
General Electric Company (GE)
It’s dividend season for General Electric options traders. GE stock will trade ex-dividend on Feb. 25, with shareholders of record as of the close on Feb. 29 eligible for a payout of 23 cents per share on April 25. Approaching ex-div dates always brings out heavy call volume for stocks thanks to a plethora of dividend capture strategies. General Electric is among the most popular for such strategies because of its dividend, which drew investor ire when it was cut during the financial crisis, and which has been in a state of quick repair ever since.
Volume was brisk on GE on Thursday, with roughly 484,000 contracts changing hands on the stock. Look for this number to skyrocket next week. Calls made up 86% of total option volume for GE on the day.
Barrick Gold Corporation (USA) (ABX)
A relative newcomer to the top 10 most active options listing, Barrick Gold made a splash with options traders yesterday after announcing it plans to cut $2 billion from its debt load this year. Despite recent attention to gold and precious metals, low commodities prices have pressured ABX stock, forcing Barrick to consider selling part of its top mines as a way to alleviate growing debt.
Options traders appeared to cheer the news, with calls snapping up 84% of ABX’s total volume of 232,400 contracts on Thursday. With February expiration looming large, ABX is trading just north of $12.50. As a result, the shares are above peak February call OI of 8,967 contracts at the $12.50 strike, while 3,069 puts rest at the $12 strike to provide potential support heading into the close this afternoon.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
