Tuesday’s Vital Data: Facebook Inc (FB), JPMorgan Chase & Co. (JPM) and American Airlines Group Inc (AAL)

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After just two days of heavy selling in the wake of the Brexit vote, U.S. stock futures are in rally mode this morning.

Tuesday’s Vital Data: Facebook Inc (FB), JPMorgan Chase & Co. (JPM) and American Airlines Group Inc (AAL)Bargain hunting depressed assets appears to be the theme in early trading, as even oil (up 2.6% at $47.52 per barrel) and the British pound are gaining ground. However, whether the rally has staying power or is just a “dead cat bounce” remains to be seen.

At last check, U.S. stock futures on the Dow Jones Industrial Average had gained 1.20%, with S&P 500 futures up 1.12% and Nasdaq-100 futures higher by 1.15%.

Options activity remained hot and heavy on Monday, as selling pressure continued to drive speculative traders toward put contracts. Overall, 18.1 million calls and 21.9 million puts changed hands on Monday, with protection and ETFs claiming the bulk of the day’s activity.

Over on the CBOE, put volume moderated a bit from Friday, as the single-session equity put/call volume ratio fell to 0.81, while the 10-day moving average held at a one-month high of 0.73.

In equity option news, Facebook Inc (NASDAQ:FB) emerges as a bargain amid the Brexit selloff, with call traders looking toward Instagram subscriber numbers for inspiration. Elsewhere, JPMorgan Chase & Co. (NYSE:JPM) options traders bet on a dividend increase and increased share buybacks ahead of the Fed’s second round of stress tests. Finally, American Airlines Group Inc (NASDAQ:AAL) saw a spike in call volume despite heavy British exposure.

Tuesday’s Vital Options Data: Facebook Inc (FB), JPMorgan Chase & Co. and American Airlines Group Inc (AAL)

Facebook Inc (FB)

With bargain hunting as today’s theme in the early going on Wall Street, Facebook stock has emerged as one of the potential prizes of the Brexit selloff. FB has been in a bit of a slump since April, with the stock facing stiff headwinds near $120, but the plunge of the past two sessions has put the stock in oversold territory.

What’s more, Instagram subscriber numbers hit last week, with the service topping 500 million users — doubling its subscribers in just two years. On average, Instagram is adding 100 million users every nine months.

Options traders apparently realized FB’s oversold status on Monday, with calls making up 64% of the session’s more than 550,000 contracts in total volume. The weekly July 1 series was a hotbed of short-term activity on Monday, riddled with a mix of buy-to-open and sell-to-open activity, as open interest at the $110 strike jumped to 4,795 contracts. With FB stock up more than 1% at $110.38 in premarket action, $110 call buyers appear to have been smart money — if FB can hold this perch through Friday’s close.

JPMorgan Chase & Co. (JPM)

JPMorgan stock drew heavy call volume on Monday, for many of the same reasons that Bank of America Corp. (NYSE:BAC) is seeing increased bullish options activity. The Comprehensive Capital Analysis and Review (CCAR), or the second round of Federal Reserve stress tests, arrives on Wednesday, and will determine whether banks can afford to increase dividend payouts and share buyback plans.

Options traders are clearly banking on positive results for JPM stock, as calls snapped up 58% of yesterday’s total volume of 378,000 contracts. Currently, weekly options traders have their sights set on the July 1 series $60 call strike, where 4,243 contracts are currently open. This out-of-the-money strike is currently asked at 21 cents, or $21 per contract, with traders needing JPM to rally more than 4.5% to realize a profit.

American Airlines Group Inc (AAL)

While banks have gotten the most attention following the Brexit vote, airline stocks have also been hammered — especially those with heavy exposure to the U.K. American Airlines Group, unfortunately, has the highest exposure to the region among U.S. carriers, and the stock has been punished harshly, shedding more than 18% in the past two sessions.

Options traders appear to be betting on a recovery for AAL stock, however, as call volume surged on Monday. Overall, 238,000 contracts traded on AAL yesterday, with calls accounting for 65% of the day’s take.

Short-term speculators have been extremely busy, with open interest at the weekly July 1 series $25.50 strike call soaring to more than 12,000 contracts. This option was last asked at 83 cents, or $83 per contract. Should AAL’s premarket action carry over into open, these $25.50 strike calls are set to trade in the money.

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/2016/06/tuesdays-vital-data-facebook-inc-fb-jpmorgan-chase-co-american-airlines-group-inc-aal/.

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