Tuesday’s Vital Data: Netflix, Inc. (NFLX), Valeant Pharmaceuticals Intl Inc (VRX) and Yahoo! Inc. (YHOO)

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Stocks are headed sharply higher in premarket activity this morning, as dovish comments from the Federal Reserve and an oil rally bolstered sentiment. On the Fed front, New York Federal Reserve President William Dudley said in a speech in China last night that he remains cautious about raising interest rates over the near term.

Heading into the open, U.S. stock futures on the Dow Jones Industrial Average have rallied 0.85%, with S&P 500 futures up 0.92% and Nasdaq Composite futures higher by 0.95%.

Options volume was anemic on Monday, at least where stocks were concerned, as exchange-traded funds continue to dominate as traders seek out some insurance in a volatile market environment. On the CBOE, the single-session equity put/call volume ratio plunged to a one-month low of 0.6, pushing the 10-day moving average to its second consecutive monthly low of 0.70.

In equity options news, Netflix, Inc. (NASDAQ:NFLX) continues to be pestered by bears in the analyst community, with the shares receiving a downgrade at Vetr Inc. late last week. Elsewhere, Valeant Pharmaceuticals Intl Inc (NYSE:VRX) had a horrible, no-good, very bad day after postponing its fourth-quarter report, suspending all guidance and announcing that Allergan plc (NYSE:AGN) was challenging it’s Xifaxan patent. Finally, Yahoo! Inc. (NASDAQ:YHOO) received a boost from activist hedge fund manager Jeffrey Smith.

Tuesday’s Vital options Data: Netflix, Inc. (NFLX), Valeant Pharmaceuticals Intl Inc (VRX), and Yahoo! Inc. (YHOO)

Netflix, Inc. (NFLX)

It’s no secret that NFLX stock is not one of the brokerage community’s favorites.  That fact was underscored once again last week when Vetr Inc. downgraded NFLX to “buy” from “strong buy” with a price target of $104.56. Overall, Netflix stock has attracted 23 buys, 17 holds and four sell ratings with an average 12-month price target of $130 per share, according to data from Thomson/First Call.

Netflix options traders appeared to heed the note of caution from the brokerage community. Volume on Monday came in at nearly 216,000 contracts, with puts edging out calls as the most popular contract on the day.

Turning to weekly March 4 series open interest, NFLX is staring up at heavy call accumulations at the $95 and $100 strikes, which sport OI of 3,128 contracts and 3,008 contracts, respectively. Meanwhile, potential put-related support lies at $92 and $90, where 1,967 and 1,998 contracts reside, respectively.

Valeant Pharmaceuticals Intl Inc (VRX)

It was a rather manic Monday for VRX shares. First, the company CEO Mike Pearson returned to work from a medical leave of absence — a move that made a lot of investors upset and was widely regarded as a bad idea. Then, Pearson postponed Valeant’s quarterly earnings report and withdrew all financial guidance. Finally, the company announced that Allergan was challenging its patent on irritable bowel syndrome drug Xifaxan.

VRX stock plunged more than 18% in response to the deluge, prompting an influx of put volume on the day. Overall, more than 203,000 contracts changed hands on VRX, with puts snapping up 53% of the day’s take.

Currently, VRX is trading well below any meaningful call OI in the weekly March 4 series, with the nearest notable accumulation of 2,941 contracts well out of the money at the $75 strike. Put OI, meanwhile, is a bit closer at hand, with 3,517 contracts at the $65 strike. Most notable, however, are the 10,566 put contracts currently open at the March $60 strike.

Yahoo! Inc. (YHOO)

Starboard Value hedge fund manager Jeffrey Smith has a history of antagonistic commentary for Yahoo. Smith has even threatened a proxy war in an attempt to oust current Yahoo CEO Marissa Mayer. On Friday, however, Smith told attendees of the MIT Sloan Investment Conference that he saw “a lot of opportunity” at YHOO. When pressed on the issue, Smith would only say it was an “interesting situation.”

The speculation drove YHOO options traders into a tizzy. Volume spiked to more than 180,000 contracts, with calls snapping up an unusually high 86% of the day’s take. Currently, YHOO stock is trading smack in the middle of heavy call OI in the weekly March series.

Overhead, the shares are facing 4,931 calls at the $32.50 strike, with another 3,100 at the $33.50 strike. Additionally, some 2,806 calls are currently open at the in-the-money $32 strike. Put OI, meanwhile, is extremely thin compared to call OI, with peak puts totaling 644 contracts at the $29 strike.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/03/tuesdays-vital-data-netflix-inc-nflx-valeant-pharmaceuticals-intl-inc-vrx-and-yahoo-inc-yhoo/.

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