Wednesday’s Vital Data: Apple Inc. (AAPL), Valeant Pharmaceuticals Intl Inc (VRX) and Intel Corporation (INTC)

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Wall Street is playing it options close to the vest this morning, as investors prepare for a statement from the Fed on interest rates and monetary policy going forward. The Federal Reserve is widely expected to leave rates steady following December’s hike, but language regarding future hikes and the state of the U.S. economy will be closely scrutinized.

At last check, U.S. stock futures on the Dow Jones Industrial Average were essentially flat (up 0.01%), with S&P 500 futures off 0.02% and Nasdaq Composite futures edging higher with a gain of 0.05%

Options volume returned to normal on Tuesday following a minor drought on Monday.  Puts quickly gained favor amid yesterday’s volatile session, with pre-Fed anxiety taking hold in the options pits. Overall, the CBOE single-session equity put/call volume ratio rose to a one-week high of 0.85, while the 10-day moving average hit a two-week high of 0.70.

In equity options news, Apple Inc. (NASDAQ:AAPL) saw call volume skip higher after Morgan Stanley said that iPhone demand is surprisingly brisk. Meanwhile, Valeant Pharmaceuticals Intl Inc (NYSE:VRX) warned that it might default on $30 billion in debt, while Intel Corporation (NASDAQ:INTC) is reportedly looking to sell $1 billion in assets from its venture capital unit, Intel Capital.

Wednesday’s Vital Data: Apple Inc. (AAPL), Valeant Pharmaceuticals Intl Inc (VRX) and Intel Corporation (INTC)

Apple Inc. (AAPL)

After months of concern, the sentiment surrounding Apple’s iPhone sales appears to be turning around. On Tuesday, Morgan Stanley said that iPhone demand seems to be ahead of initial estimates so far in 2016. The brokerage firm said it believes that Apple sold 56.5 million iPhones in the first quarter, up from prior estimates for 49 million. The news helped push AAPL to a 2% gain on the day.

AAPL options activity was also strengthened by the report, with volume rising to more than 1.3 million contracts. Calls made up the bulk of Tuesday’s action, accounting for 66% of the day’s take. Following Tuesday’s rally, AAPL is now on the verge of challenging the $105 strike, which is home to more than 83,000 call contracts in the March series. With little in the way of call open interest above $105, a breakout here could clear the way for a quick rally to $110 within the next week or two.

Valeant Pharmaceuticals Intl Inc (VRX)

Valeant dropped a bombshell on VRX stockholders yesterday. With sales struggling, Valeant warned that it could default on $30 billion in debt. The company also cut its 2016 sales and earnings projections. As a result, VRX’s stock price was more than cut in half, with the shares plummeting more than 51%.

Options traders flooded VRX stock in response to the news, with more than 1.1 million contracts changing hands on Tuesday. Activity was split nearly evenly between calls and puts, as traders were torn between chasing the decline and betting on a rebound from the heavy selling.

As you might suspect, VRX is now trading well south of any significant OI accumulations, with the roughly 5,300 put contracts at the March $35 strike the only meaningful action near yesterday’s close. The nearest notable call OI resides well overhead at the March $40 strike, totaling roughly 15,700 contracts.

Intel Corporation (INTC)

Intel put option traders were out in force on Tuesday, with activity seemingly in response to news that the company is looking to sell $1 billion in assets from its Intel Capital venture capital unit. According to people familiar with the matter, Intel is working with UBS Group to explore potential buyers.

INTC stock put activity seems a bit unusual following news that, if confirmed, could help push the shares higher. Overall, some 223,000 contracts traded on INTC yesterday, with puts accounting for nearly 90% of the day’s take. The likely reason for the added put activity could be married put action, where stock buyers also purchase put contracts as a hedge to their long stock positions.

Another point supporting the notion of bullish INTC stock action is that the shares have closed three consecutive sessions north of their 200-day moving average — a feat last accomplished in December. This technical indicator may have brought cautious buyers out of the woodwork, especially with INTC challenging key overhead resistance at $32.

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/wednesdays-vital-data-apple-inc-aapl-valeant-pharmaceuticals-intl-inc-vrx-and-intel-corporation-intc/.

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