U.S. stock futures look to make it four in a row this morning, as Wall Street heads higher ahead of weekly jobless claims and manufacturing data. Stocks closed out another positive day yesterday, after Federal Reserve minutes suggested a pause in interest rate hikes due to recent market turmoil.
Heading into the open, futures on the Dow Jones Industrial Average are up 0.52, while futures on the S&P 500 are higher by 0.47% and Nasdaq Composite futures are up 0.63%.
There were no real surprises with equity option volume on Wednesday, as traders turned in another average session. Checking in with the CBOE, the single-session equity put/call volume ratio whipsawed lower on Wednesday, plunging from 0.8 on Tuesday to rest at 0.68. As a result, the 10-day moving average finally ended its uptrend, slipping to 0.81 after a string of weekly highs.
In equity options news, Bank of America Corp (NYSE:BAC) received heavy call attention after a Baird report showed strong growth in consumer credit. Elsewhere, Gilead Sciences, Inc. (NASDAQ:GILD) saw call volume spike following a new FDA indication for HIV drug Harvoni, while Kinder Morgan Inc (NYSE:KMI) saw investor sentiment bolstered after an SEC filing revealed an increased stake by Warren Buffett.
Bank of America Corp (BAC)
According to the latest report from Baird, January credit trends in the U.S. showed a pullback in banks but strong fundamentals for consumer credit. The report was enough to significantly boost confidence in BAC stock, with the shares gaining more than 2.6% on Wednesday, pushing the shares north of resistance at their 10-day moving average.
Options traders jumped on the bullish tailwind, sending more than 843,000 contracts across the tape for BAC stock. Furthermore, calls accounted for a whopping 71% of the day’s take, hinting at a growing bullish bias among short-term traders. Looking at February open interest, BAC has eclipsed some 44,000 calls at the $12.50 strike, while another 53,000 lie just overhead at $13. A breakout above $13 this week could be a bullish signal for BAC stock traders.
Gilead Sciences, Inc. (GILD)
GILD stock slipped nearly 2% on Wednesday, despite a new FDA indication for Gilead’s HIV treatment Harvoni. The drug is now approved for use in chronic hepatitis C patients with advanced liver disease.
Options traders, meanwhile, appeared quite bullish on the news. Volume soared to a short-term high of more than 307,000 contracts, with calls snapping up 85% of the day’s take. Currently, GILD is hovering just below some 4,800 calls at the Feb $90 strike, with another 13,872 at the $92.50 strike. On the put side, there are 5,687 puts currently open at the Feb $90 strike, making $90 a pivot point for GILD that could make or break the shares over the short term.
Kinder Morgan Inc (KMI)
Getting Warren Buffett’s attention is almost always good for a stock. KMI stock, in fact, surged nearly 10% on Wednesday after an SEC filing revealed that Buffett’s Berkshire Hathaway Inc (NYSE:BRK.A, BRK.B) acquired 26.5 million KMI shares in the fourth quarter. KMI also received a boost from rising oil prices this week.
Options traders greeted the news with record short-term volume for KMI, with more than 253,000 contracts changing hands on Wednesday. Calls made up the bulk of the day’s activity, accounting for 67% of total KMI option volume.
Taking a closer look at February options, KMI’s surge has placed it north of peak call OI of roughly 11,000 contracts at the $17.50 strike. The next hurdle is $18, where some 7,800 calls are currently open, though technical resistance doesn’t materialize until about the $20 region.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
