Stocks are on course for a rough start to the second quarter, as U.S. stock futures are mired in read heading into the open. Investors are more than a little nervous weighing their options ahead of this morning’s March nonfarm payrolls report, with economists targeting a gain of 203,000 jobs on the month.
At last check, futures on the Dow Jones Industrial Average were off by 0.31%, with futures on the S&P 500 down 0.35% and Nasdaq Composite futures lower by 0.45%.
Options volume was was quite heavy on the last day of the quarter, though most of the action targeted ETFs. Over on the CBOE, the single-session equity put/call volume ratio came in at 0.68, while the 10-day moving average held at 0.7.
In equity options news, Apple Inc. (NASDAQ:AAPL) stock retreated after the FBI offered to share its iPhone hack in other criminal cases. Elsewhere, Tesla Motors Inc (NASDAQ:TSLA) option activity was mixed ahead of the Model 3 unveiling, and Pfizer Inc. (NYSE:PFE) investors were taken in by a hoax press release.
Apple Inc. (AAPL)
Despite claims that it would only use an Apple iPhone hack on the San Bernadino case, the FBI has quickly moved to offer assistance in hacking other iPhones in criminal cases across the country. While the current hack reportedly only affects the iPhone 5, the PR is bad for iPhone security in general, as it is surely only a matter of time before the hack is leaked on the Internet. Luckily for iPhone 6 and later customers, Apple’s security has yet to be breached.
The impact on the stock couldn’t have come at a worse time, as the shares were challenging overhead resistance at $110. Despite the retreat, AAPL options traders were call heavy on Thursday. Overall volume totaled more than 701,000 contracts, with calls accounting for 66% of the day’s take.
Traders should keep a close eye on $110, with April 1 series options expiring at the close. The $110 strike is home to peak call open interest in the weekly April series, totaling more than 22,000 contracts. By comparison, peak put OI for the series totals 9,900 contracts a the $99 strike — likely a sign of put sell activity.
Tesla Motors Inc (TSLA)
Late Thursday afternoon, Tesla took the wraps off its new Model 3 mass-market sedan. The car will go into production for 2017, cost $35,000 before tax credits and have a range of 215 miles on a full charge. Before the unveiling, Tesla said it had more than 115,000 pre-orders for the Model 3, but that number jumped to more than 137,000 during the event. In fact, customers camped out overnight outside Tesla stores in California — reminiscent of Apple iPhone launches.
Options traders had mixed opinions heading into the launch. Overall volume totaled more than 308,000 contracts, with call and put volume divvied up 55% to 45%. In premarket trading, TSLA is trading north of $245, putting the stock north of all major put and call OI, save the 5,100 calls at the $250 strike.
If the market reverses course today, traders could see TSLA challenge $250.
Pfizer Inc. (PFE)
Pfizer had an unusually rough day on Thursday, as PFE stock fell victim to a hoax press release. Specifically, a release from an unidentified source said that Pfizer would no longer raise its drug prices. The report had PFE stock down more than 2% during intraday trading yesterday before the hoax was revealed.
PFE options traders were quick to jump on the speculation, sending more than 316,000 contracts across the tape. What’s more, activity was mixed, with calls only accounting for 52% of the day’s take. Ironically, those call traders may be in for some opportunistic profits, as PFE is sure to bounce back from this setback. In particular, the $30 strike is worth taking a closer look at, with the monthly April 15 series sporting call OI of 66,000 contracts and put OI of 75,000 contracts.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
