U.S. stock futures are pointing toward additional gains this morning, as Wall Street shows no signs of slowing its recent rally. In fact, the Dow Jones Industrial Average has soared nearly 360 points in the past two sessions.
On tap this morning, investors will be greeted with jobless claims and durable goods data. Oil, meanwhile, is trading north of $50 per barrel for the first time in six months.
Against this backdrop, futures on the Dow were last seen higher by 0.22%, with S&P 500 futures adding 0.16% and Nasdaq-100 futures up 0.18%.
Calls gained momentum amid the two-session surge on Wall Street, with more than 16.7 million of these typically bullish bets changing hands compared to 14.2 million puts. Over on the CBOE, the single-session equity put/call volume ratio tripped higher to 0.62, though the 10-day moving average slipped to its lowest level in nearly a month.
In equity option news, Alibaba Group Holding Ltd (NYSE:BABA) was hammered for a nearly 7% loss after the company announced that the SEC was investigating its earnings and partner transactions. Elsewhere, Yahoo! Inc. (NASDAQ:YHOO) call volume climbed and YHOO stock fell on reports that AT&T Inc (NYSE:T) put in a bid for Yahoo!’s internet services. Finally, Sarepta Therapeutics Inc (NASDAQ:SRPT) call volume spiked after the FDA said it needed more time to review Sarepta’s Duchenne muscular dystrophy (DMD) drug eteplirsen.
Alibaba Group Holding Ltd (BABA)
If you were wondering about Alibaba’s bottom line and earnings, and how the company raked in more revenue on Singles Day than revenue than the United States’ Black Friday and Cyber Monday combined, you’re not alone. The SEC is wondering too, and the company announced that the corporate watchdog is looking into Alibaba’s earnings and partner transactions. While an SEC investigation doesn’t mean definite wrongdoing, BABA stock was still smacked for a loss of nearly 7%.
Options traders also weren’t willing to give BABA the benefit of the doubt, as puts accounted for 53% of yesterday’s total volume of nearly 900,000 contracts. As a result of yesterday’s decline, BABA is now trading south of all major May put open interest, save the $75.50 and $75 strikes — both of which sport OI of about 4,500 contracts, and could act as support heading into Friday’s close.
Yahoo! Inc. (YHOO)
YHOO stock and options activity were sending mixed messages on Wednesday. The stock shed more than 5% while call option volume swelled in response to news that AT&T has emerged as a bidder for Yahoo!’s internet business. Verizon Communications Inc. (NYSE:VZ) is considered the leading bidder at the moment, but AT&T’s participation ensures that the bidding war will heat up.
As for YHOO options activity, calls made up 78% of the more than half-a-million contracts trading on the stock on Wednesday. Calls currently dominate the weekly May 27 series, with 23,000 contracts at the $37.50 strike and 12,000 at the $38 strike. However, yesterday’s decline may have placed these profit on these contracts just out of reach for bullish options traders — unless YHOO bounces back before the close tomorrow.
Sarepta Therapeutics Inc (SRPT)
Typically, delays in drug reviews can sink a pharmaceutical stock, but when it comes to the FDA’s review of Sarepta’s DMD drug eteplirsen, analysts figure the FDA’s delay means the drug is slated for approval. Sarepta said that the FDA will continue to review the drug and that it hopes to finish its review in a timely manner.
It’s no small review, either, as Sarepta’s future could be riding on FDA approval.
Options traders are loaded and ready for a continued rally. Volume swelled to more than 230,000 contracts yesterday, with calls snapping up 69% of the day’s take. Currently, SRPT is trading well north of all major short-term call OI, though there are 3,100 contracts at the out-of-the-money May 27 $25 strike and 4,100 contracts at the $30 strike, as speculators bet on another surge for SPRT.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
