Wall Street is set for a lower open Monday morning as traders digest the possibility for another Fed rate hike before year’s end, as well as a disappointing G-20 meeting where leaders fought over potentially looser monetary policy. It could have been worse, whoever, as China’s move to cut its reserve requirement for Chinese banks has helped stocks bounce back from steeper losses.
Heading into the open, U.S. stock futures on the Dow Jones Industrial Average were last seen lower by 0.39%, with S&P 500 futures off 0.36% and Nasdaq Composite futures down 0.56%.
Options volume was brisk on Friday, with ETFs seeing some blow off due to the expiration of weekly Feb. 26 series options. Over on the CBOE, the single-session equity put/call volume ratio bounced to 0.64, while the 10-day moving average hit a one-month low of 0.71.
In equity options news, Bank of America Corp (NYSE:BAC) call volume spiked following news that BofA could lay off more than 5% of its staff in 2016. Meanwhile, SunEdision Inc (NYSE:SUNE) shares skyrocketed after a judge cleared the way for the acquisition of Vivint Solar (NASDAQ:VSLR). Finally, Tesla Motors Inc (NASDAQ:TSLA) is seeing mixed options activity as it battles legislation that would ban direct to consumer automobile sales in Indiana.
Bank of America Corp (BAC)
According to the infamous “people familiar with the matter,” Bank of America is planning another round of layoffs this year. The cuts could come as soon as March 8, with more than 5% of BofA’s workforce on the line. Bank of America representatives have declined to comment on the report.
Options traders appeared unperturbed by the news. Volume came in at a healthy 831,500 contracts on Friday, with calls snapping up 77% of the day’s take. Looking at weekly March 4 series open interest, there are nearly 15,000 calls currently open at the $12 strike, just below BAC stock, with some 17,700 puts residing at the $11.50 strike. Overhead, BAC is staring up at more than 12,000 contracts at the $12.50 call strike.
SunEdison Inc (SUNE)
Shares of SUNE surged nearly 32% on Friday, after a judge allowed the company to proceed with its $1.9 billion acquisition of Vivint Solar. SunEdison altered the terms of the takeover last year, leading to the judicial hearing. The company hopes to complete the acquisition before the end of the first quarter.
Options traders have been hot on SUNE stock recently. On Friday, the shares saw heavy short-term activity, with nearly 285,000 contracts changing hands on SunEdison. Furthermore, calls accounted for 86% of total volume on the day.
SUNE stock is now trading north of both major weekly March 4 series call strikes: the $1.50 and the $2 — both of which sport OI of more than 7,000 contracts. The $2.50 becomes the next hurdle for SunEdison, with nearly 2,900 calls open at this overhead strike.
Tesla Motors Inc (TSLA)
Tesla is once again in a battle to sustain its direct-to-consumer sales model — this time, in Indiana. The Indiana legislature is currently considering a bill that would ban direct to consumer auto sales, and the bill has a major industry backer: General Motors Company (NYSE:GM). Currently, automakers are not allowed direct sales if they also have franchise dealers for distribution — a law that GM says is unfair.
TSLA options traders are feeling a bit of uncertainty in the waters, judging by recent trading activity. On Friday, volume rose to roughly 235,500 contracts, with calls only mustering 52% of the day’s take. As for OI, the $190 is the strike to watch this week, as there are 1,072 calls and 1,004 puts currently open at this strike in the weekly March 4 series.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
