U.S. stock futures are headed higher this morning, as Wall Street has largely shrugged off a coup attempt in Turkey over the weekend in favor of mounting corporate earnings reports
As a result, the Dow Jones Industrial Average is headed for yet another record high, with futures up 0.12% at last check. Meanwhile, futures on the S&P 500 were up 0.19% and Nasdaq-100 futures added 0.13%.
Options activity remained brisk on Friday, with 16.5 million calls and 12.4 million puts changing hands. The call bias was heavy heading into the meat of corporate earnings season, with the CBOE single-session equity put/call volume ratio falling to a three-month low of 0.52. The 10-day moving average hit a one-month low of 0.60.
In equity option news, Apple Inc. (NASDAQ:AAPL) faltered on Friday following news that iPhone sales were flat in China, though calls still continued to roll in at a healthy clip. Meanwhile, Bank of America Corp (NYSE:BAC) and Netflix, Inc. (NASDAQ:NFLX) also saw respectable call option activity ahead of today’s quarterly earnings reports.
Apple Inc. (AAPL)
Market research firm Apteligent released its June report on Apple last week, with Chinese sales data sitting front and center. According to the firm, Apple’s Chinese revenue fell 26% in the March quarter, with iPhone sales coming in flat. Furthermore, while the iPhone 6 is the most popular device in China, the upgrade cycle to the iPhone 7 may not be as rosy.
While AAPL stock stalled out on Friday as the report sunk in, options traders remained undeterred. More than 809,000 contracts crossed the tape on AAPL on Friday, with calls snapping up 63% of the day’s take.
With earnings slated to hit the Street next week, the weekly July 29 series was quite popular. Currently, peak call open interest for the series totals 22,400 contracts at the $100 strike, with another 18,327 call contracts at the in-the-money $95 strike.
AAPL bulls should be somewhat concerned about the lack of out-of-the-money call option activity, as it points to lackluster expectations among speculators ahead of earnings.
Bank of America Corp. (BAC)
Bank of America took to the earnings stage this morning to report second-quarter earnings of 36 cents per share on revenue of $20.6 billion. While both figures fell year-over-year, Bank of America bested consensus expectations for earnings of 33 cents and revenue of $20.41 billion. Despite the beat, BAC stock was down for a while in premarket trading, potentially due to banking concerns following the turmoil in Turkey. It has since turned positive.
BAC options traders were hoping for a more robust outcome for the stock, as calls made up 68% of Friday’s total volume of 706,000 contracts. In premarket action, BAC is holding above $13.50, which is home to more than 25,000 call contracts in the July 22 series, while more than 78,700 calls loom overhead at the $14 strike. With the initial reaction turning lower for BAC, this overhead OI could create headwinds throughout the week.
Netflix, Inc. (NFLX)
Netflix will join the earnings parade after the close of trading today. Wall Street is looking for a profit of two cents per share from the online streaming company, while EarningsWhisper.com places the whisper number at a profit of four cents per share. Revenue is expected to rise 28.4% to $2.11 billion.
NFLX options traders appear to have high hopes, with calls making up 63% of Friday’s volume of 276,000 contracts.
Overall, the weekly July 22 put/call open interest ratio for NFLX arrives at a moderately positive 0.71, while implieds are pricing in a potential post earnings move of 9.91% — placing the upper bound at $107.71 and the lower bound at $88.29.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
