Wall Street is taking a breather Tuesday morning, as stocks are poised to open a bit lower heading into the open. Later in the session, traders will be greeted with the December Case-Shiller home price index, January existing home sales and the February consumer confidence reading.
Ahead of this data, U.S. stock futures on the Dow Jones Industrial Average were last seen down 0.1%, with S&P 500 futures off 0.1% and Nasdaq Composite futures down 0.24%. Activity in the options pits retreated a bit from Friday’s deluge, though volume remained elevated. Over on the CBOE, the single-session equity put/call volume ratio plunged to 0.58, as call volume surged in the wake of February expiration. As a result, the 10-day moving average slipped to a one-week low of 0.78.
In equity options news, Facebook Inc (NASDAQ:FB) CEO Mark Zuckerberg made a surprise appearance at Samsung’s Mobile World Congress to tout a new alliance on VR development. Meanwhile, Bank of America Corp (NYSE:BAC) call volume spiked despite a report that fixed income, currencies and commodities units dropped in 2015. Finally, Freeport-McMoRan Inc (NYSE:FCX) soared following a media report that BHP Billiton Limited (NYSE:BHP) should buy the company.
Facebook Inc (FB)
Facebook CEO Mark Zuckerberg is betting big on VR. In fact, Zuckerberg made an unscheduled appearance at Samsung’s Mobile World Congress to announce a new partnership with Samsung to work on Gear VR consumer headsets. Facebook is already selling Gear VR for $99, but the partnership bundles the headset with Samsung’s new Galaxy S7 and S7 Edge smartphones.
On the options front, FB call options regained some popularity on Monday. Total volume rose to just over 691,000 contracts, with calls snapping up 65% of the day’s take.
In terms of potential options-related resistance, FB is staring up at more than 6,000 contracts at each of the $107, $108 and $109 strikes in the weekly Feb 26 series. Furthermore, another 7,958 calls reside at the $110 strike.
Bank of America Corp (BAC)
While BAC stock rose more than 3.3% on Monday, Bank of America stock traders were faced with a rather nasty report from research firm Coalition. According to the group, fixed income, currencies and commodities (FICC) units for all of the major banking firms dropped 9% year-over-year in 2015. FICC units are considered among the industry’s most profitable products.
BAC options traders appeared as unphased as stock traders by the report, however. Volume rose to more than 567,000 contracts, as calls surged to account for roughly 70% of the day’s take. BAC is currently perched at $12.50, pinning the stock alongside more than 19,700 call contracts in the weekly February series. Furthermore, BAC is looking up at nearly 23,000 calls at the $13 strike. On the put side, both the $12 and $12.50 put strikes sport OI just north of 8,000 contracts in the February series.
Freeport-McMoRan Inc (FCX)
FCX stock received an unexpected boost on Monday after a media report suggested that BHP Billiton should buy Freeport-McMoRan. According to the report, both companies are engaged in metals and oil production, and synergies between the two would make for a good tie-up. Neither company has commented on the suggested buyout, though considering BHP just slashed its dividend, the realities of an actual buyout seem questionable.
Options traders, meanwhile, appeared to love the idea. Volume soared to a short-term high for FCX on Monday, with more than 390,000 contracts changing hands. What’s more, call options made up a whopping 80% of FCX’s total volume on the day.
Turning to weekly February OI configs for FCX, peak call open interest for the series totals 5,174 contracts at the just-overhead $8 strike, while peak put OI numbers 6,547 contracts at the just out-of-the-money $7.50 strike. Barring any major market moves, FCX could be locked in a trading range for the remainder of the week.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
