Wall Street looks exhausted this morning, as stocks are poised for a break following three back-to-back weekly gains. A rally in oil prices, which gained roughly 10% last week, has helped push stocks higher. Oil is higher by more than 1% overseas, but traders appear either reluctant or out of gas heading into the open this morning.
At last check, U.S. stock futures on the Dow Jones Industrial Average were down 0.28%, with S&P 500 futures off 0.4%, and Nasdaq Composite futures were lower by 0.47%.
Options volume was heavy on Friday, with the expiration of weekly March 4 series contracts drawing quite a few speculators to the table. Calls continued to be a favorite among short-term traders, pushing the CBOE single-session equity put/call volume ratio down to 0.59 on Friday. The 10-day moving average, meanwhile, hit a three-week low of 0.66 to close out the week.
On the equity options front, Apple Inc. (NASDAQ:AAPL) continued to extend its market share lead in January, according to a recent report from comScore. Meanwhile, Seadrill Ltd (NASDAQ:SDRL) more than doubled on Friday after bailout rumors fueled a significant short-squeeze rally. Finally, analysts at Bank of America Merrill Lynch attempted to bring Alcoa Inc (NYSE:AA) stock back to earth with a downgrade and target cut late last week.
Apple Inc. (AAPL)
According to the latest data from comScore, Apple is still the leading smartphone manufacturer … by a wide margin. In December, Apple increased its smartphone share by 30 basis points to 43.6% of the market. The closest competitor was Samsung, which saw its smartphone market share rise 60 basis points to 28.5%. However, Alphabet Inc.’s (NASDAQ:GOOG, NASDAQ:GOOGL) Android still remains the top operating system, with 52.8% of the market, compared to iOS’s 43.6% share.
Options activity was brisk on AAPL on Friday, with the stock attracting volume of more than 1.7 million contracts. Calls were once again back in favor, accounting for 63% of the day’s take. Checking in with weekly March 11 series open interest, traders should keep an eye on the 9,081 calls open at the $102 strike and the 9,800 calls residing at the $105 strike. On the put side, there are nearly 6,300 contracts at the $100 strike.
Seadrill Ltd (SDRL)
SDRL stock posted its biggest rally ever on Friday, soaring more than 121% following news that primary owner John Fredriksen raised $510 million in the past week. The revelation sparked rumors of a potential bailout by Fredriksen. Short covering was also a considerable factor in SDRL’s surge on Friday. As of the most recent reporting period, some 15% of the stock’s float was sold short.
Nearly 500,000 SDRL option contracts changed hands on Friday, with calls accounting for a hefty 69% of the day’s take. Seadrill has seen a steady rise in call volume of late, with bullish options traders and short sellers looking for a hedge have snapped up calls at a rapid pace.
Currently, short-term SDRL options traders are focusing on the weekly March 11 series $4.5 strike, where more than 1,500 contracts are currently open. By contrast, peak put OI for the series totals just 763 contracts at the same strike.
Alcoa Inc (AA)
AA stock has slowly made its way back onto the most active options listing, as strength in commodities is helping to push the shares higher. However, analysts at Bank of America Merrill Lynch issued a warning last week. The brokerage firm downgraded AA stock to neutral from buy and cut its price target to $10.50 from $12, while reminding investors that alumina prices have declined by more than a third since June.
AA options traders weren’t having it, though. The stock added 1% on Friday, and calls surged to account for 68% of the 416,000 AA contracts traded on the session. Strikes to watch this week include the weekly March 11 series $10 strike, where 2,287 contracts are currently open, as well as the $9.50 strike, which sports put OI of 6,113 contracts.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
