Wall Street is in a bullish mood heading into the open this morning. Stocks are pointed sharply higher in premarket activity following a rally in Europe and a rebound in crude prices. However, traders will want to keep a close watch on Federal Reserve Chairwoman Janet Yellen’s speech later today, as she delivers her semiannual monetary policy report to the House Financial Services Committee.
Heading into the open, U.S. stock futures on the Nasdaq Composite have jumped 1.36%, while Dow Jones Industrial Average futures are up 0.75% and S&P 500 futures have rallied 0.93%.
Options volume came in well below average on Tuesday, as traders were hard pressed to pick a direction ahead of economic data and a speech from the Fed. On the CBOE, the single-session equity put/call volume ratio reversed course sharply, dropping to 0.76 from Monday’s perch at 0.93. The 10-day moving average, however, extended its gains to hit another one-week high of 0.75.
In equity options news, Facebook Inc (NASDAQ:FB) saw call volume attempt to return to normal on Tuesday, despite the company running into privacy issues in France. Meanwhile, Twitter Inc (NYSE:TWTR) saw heavy but mixed options volume ahead of this evening’s quarterly earnings report. Finally, Walt Disney Co (NYSE:DIS) posted solid quarterly results, but ESPN and media networks revenue scuttled an otherwise solid report.
Facebook Inc (FB)
More privacy issues cropped up for Facebook on Tuesday. After being scolded in India, FB now faces legal issues in France for collecting non-user data without consent. Facebook has been given a three-month deadline to comply with French courts or face sanctions.
Option volume came in below average for FB stock on Tuesday. Overall, just 811,000 contracts changed hands, versus a tw0-month average north of 1 million shares per day. Call volume made a comeback from depressed levels, however, rising to claim 60% of Tuesday’s total activity.
Looking at weekly Feb 12 series open interest, traders will want to keep an eye on $100. This strike is home to 5,141 calls and peak put open interest of 13,332 contracts. Additionally, the $105 strike could see additional attention today, with 10,176 call contracts in residence.
Twitter Inc (TWTR)
Beleaguered microblogging site Twitter will step into the earnings confessional after the close this afternoon. Wall Street is currently expecting a profit of 12 cents per share on revenue of $709.94 million. Expectations are quite low for TWTR heading into the report, with EarningsWhisper.com pegging earnings flat with the consensus at 12 cents per share.
Options traders are mixed heading into the report. Tuesday saw just north of 300,000 contracts change hands on TWTR stock, with calls staking out a minor majority of 54% of the take.
Twitter is trading south of all major call strikes in the weekly Feb 12 series, with 2,805 contracts at the $15 strike just overhead. Peak put OI, meanwhile totals 3,416 contracts at the $14 strike, which lies just below TWTR’s current perch.
Walt Disney Co (DIS)
Thanks to blockbuster results from Star Wars: The Force Awakens, Walt Disney posted record quarterly results. For the quarter, earnings came in at $1.63 per share, blowing past expectations for $1.45 per share. Revenue soared 14% to $15.2 billion. However, a 6% decline in operating income for Disney’s media networks unit (which contains ESPN) was enough to spark a after-hours selloff.
Options traders appeared to be prepared for the decline in Disney stock. Option volume on Tuesday soared to an above average 292,000 contracts for DIS, with puts accounting for 58% of the take. Levels to watch today include the weekly Feb 12 series $90 strike put, where 3,769 contracts reside, as well as the $89 strike put, which sports OI of 6,393 contracts.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
