U.S. stock futures are up big this morning, as sentiment on Wall Street improved sharply following a rebound in oil prices and a larger-than-expected stimulus package from the European Central Bank. Heading into the open, futures on the Dow Jones Industrial Average were up 0.87%, with S&P 500 futures rallying 0.96% and Nasdaq Composite futures soaring 1.18%.
Options volume was brisk on Thursday, though ETFs saw the most action. In fact, the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) and the PowerShares QQQ Trust (NASDAQ:QQQ) accounted for nearly 10 million contracts alone yesterday. Overall, the CBOE single-session equity put/call volume ratio bounced sharply to 0.74, pulling the 10-day moving average higher to 0.67.
In equity options news, Apple Inc. (NASDAQ:AAPL) set the date for a new analyst event, prompting Piper Jaffray to weigh in on its expectations for the event. Elsewhere, The Coca-Cola Co (NYSE:KO) was targeted by bullish commentary from RBC Capital Markets, while Twitter Inc (NYSE:TWTR) is handing out cash and stock bonuses to stem employee losses.
Apple Inc. (AAPL)
March 21 is the date of the next Apple media event, with the company sending out invitations to analysts and reporters yesterday. Piper Jaffray weighed in on its expectations for the event, stating that while it was too early to expect anything on the iPhone 7 front, the brokerage firm believes Apple will announce a smaller iPhone to replace the 5S. Piper also said it doesn’t expect to see anything on the rumored 3D touch interface, which is one of the expected centerpieces of the coming iPhone 7.
Options activity for AAPL stock on Thursday came in just above average on the session. Nearly 1 million contracts crossed the tape on AAPL stock, with calls accounting for 60% of the take. Looking at today’s levels to watch, AAPL is staring up at more than 20,000 calls at the $102 strike in the March 11 series.
While the shares are up nearly 1% in premarket trading, a breakout above $102 seems unlikely given short-term technical resistance. Should things turn south heading into the close, support should hold near $100, bolstered by more than 15,000 put contracts in the weekly March series.
The Coca-Cola Co (KO)
After breaking above long-term resistance near $44 earlier in the week, KO stock is now trading in all-time high territory north of $45. The breakout prompted analysts at RBC Capital Markets to weigh in on the KO stock — reiterating KO at outperform and raising their price target to $51 from $47. Overall, the analyst community has doled out 14 buys, 11 holds and one sell, with an average price target of $48 per share.
Options traders are apparently expecting more upside for KO stock. The shares saw record short-term volume on Thursday, with more than 445,000 contracts crossing the tape. What’s more, calls snapped up a whopping 96% of the day’s take.
Looking ahead to next week, KO is already trading north of peak March call OI, which numbers 19,600 contracts at the $45 strike. Another 8,360 calls lie just overhead at the $46 strike. Meanwhile, peak March put OI is currently deep out of the money, totaling roughly 11,000 contracts at the $40 strike.
Twitter Inc. (TWTR)
Twitter found itself in a bit of a bind on Thursday. The company was targeted by research firm Sanford C. Bernstein, which said that the company’s stock-based compensation plan was an “underappreciated operating expense” which was “uniquely treacherous.” At the same time, Twitter moved to dole out unscheduled cash and stock bonuses as a preventative measure against further employee exits — the company has seen several top employees jump ship in in the past couple of months.
Options traders didn’t seem worried about the research note or TWTR stock’s nearly 6% plunge. Option volume swelled to 239,000 contracts, with calls making up 74% of the day’s activity.
Turning to March expiration, TWTR is trading well below most heavy call accumulations — 20,000-plus contracts at the $20 and $24 strikes — with only the 9,600 calls at the $17 strike imposing any immediate influence. Put options, meanwhile, have accumulated at the March $17 strike (12,160 contracts) and the March $15 strike (18,203 contracts), hinting at expectations for further losses for TWTR stock.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
