The major market indices saw their biggest single-session gain in a month on Tuesday. But stocks are headed toward a lower open this morning, as traders seek to take profits off the table. A pullback in oil prices is also weighing heavily on stocks in early action on Wall Street.
Heading into the open, U.S. stock futures on the Dow Jones Industrial Average have dipped 0.23%, with S&P 500 futures off 0.27% and Nasdaq Composite futures lower by 0.16%.
Options volume was average on Tuesday, though puts saw a pickup in activity following several sessions of decline. On the CBOE, the single-session equity put/call volume ratio bounced to 0.68, though the 10-day moving average continued lower to hit its third-straight monthly low of 0.68.
In equity options news, Facebook Inc (NASDAQ:FB) calls were popular despite the company being smacked with a €100,000 fine for breaching privacy laws. Meanwhile, Marathon Oil Corporation (NYSE:MRO) plunged after the company announced a new stock offering of 135 million shares. Finally, Ford Motor Company (NYSE:F) powered higher after February auto sales came in much better than expected.
Facebook Inc (FB)
A German court ruled on Tuesday that Facebook failed to follow orders for terms and conditions in the use of users’ intellectual property. As a result, Facebook was fined €100,000 for failure to comply with the court. Adding to Facebook’s woes in Germany, the company has been accused of moving too slowly to address rising hate speech on the social media website in the country.
FB stock options traders largely shook off the news amid yesterday’s nearly 3% rally. Overall, FB stock saw more than 440,000 contracts trade on Tuesday, with calls accounting for 58% of the day’s take.
Levels to watch this week include the weekly March 4 series $110 strike, where nearly 9,000 call contracts reside. Additionally, the $109 strike is home to 7,300 calls, which could be an issue if FB slips back below this strike heading into Friday.
Marathon Oil Corporation (MRO)
MRO stock faltered amid Tuesday’s rally, slipping almost 3% after Marathon Oil announced that it would offer 135 million new shares. Another 20.5 million shares will be sold to underwriters of the deal. Marathon said proceeds from the offering will go to strengthen its balance sheet and for general corporate purposes.
Looking to take advantage of the share dilution, MRO stock options traders piled into puts on Tuesday. Overall volume came in at a near-term record of almost 347,000 contracts, with puts snapping up 74% of the day’s take.
MRO is currently hovering just below $8, an area that is home to both the stock’s 10-day and 20-day moving averages. Furthermore, there are more than 9,000 call contracts at both the $8 and $8.50 strikes in the March 4 series, which could create headwinds for the shares this week.
Ford Motor Company (F)
Ford stock roared more than 4.5% higher on Tuesday after February auto sales data jumped 20.4%. By comparison, Wall Street was expecting sales of between 12.4% and 17.1%. Driving growth was a 29.2% spike in SUV sales, which clearly benefited from ultra-low prices at the pump.
F stock options traders were call happy on Tuesday, as the typically bullish bets accounted for 59% of the day’s total volume of 305,606 contracts. As for levels to watch this week, Ford is currently perched on peak March 4 series call OI of 18,726 contracts at the $13 strike. Put support, meanwhile, doesn’t emerge until the $12 strike, where 3,656 contracts are currently open.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
