U.S. stock futures are trading flat-to-lower heading into the open this morning, as a mix of economic data and corporate earnings has Wall Street weighing its options.
While Facebook Inc (NASDAQ:FB) posted strong quarterly results, and the Federal Reserve’s comments were seen as dovish on interest rates, many investors are still eyeing the Bank of Japan, which (they hope) will announce more easing at the conclusion of its two-day policy meeting.
Against this backdrop, futures on the Dow Jones Industrial Average are off 0.02%, S&P 500 futures are essentially flat, up 0.01%, as are Nasdaq-100 futures, which have slipped 0.01%.
Options activity was brisk on Wednesday, with Apple Inc. (NASDAQ:AAPL) and Facebook driving heavier-than-normal volume. Overall, some 16.6 million calls and 13.4 million changed hands yesterday. Over on the CBOE, the single-session equity put/call volume ratio reversed course, slipping to 0.66, while the 10-day moving average continued higher, hitting a three week high of 0.63.
In equity option news, Facebook was flooded with call options on Wednesday, though bulls remain cautious on ad-revenue growth concerns. Meanwhile, Molson Coors Brewing Company (NYSE:TAP) saw record short-term options volume after SABMiller plc (OTCMKTS:SBMRY) halted integration operations with Anheuser Busch Inbev SA (ADR) (NYSE:BUD). Finally, Ford Motor Company (NYSE:F) saw cautious options activity head of this morning’s quarterly report, where Ford missed earnings expectations.
Facebook Inc (FB)
Social media giant Facebook reported earnings of 97 cents a share on revenue that rose 59% to $6.43 billion, compared to expectations for earnings of 82 cents per share on sales of $6.02 billion. All in all, it was a blowout quarter for Facebook, with FB up more than 10% in after-hours trading.
However, Chief Financial Officer Dave Wehner cut FB stock’s gain to about 4% after stating that Facebook expects lower ad revenue growth in the next two quarters.
FB stock options traders were quite bullish ahead of the report, with calls making up 67% of the more than 1.7 million contracts traded on the shares yesterday. While the shares initially vaulted past all major call open interest strikes in the weekly July 29 and August series, this morning’s retreat now has FB hovering just south of heavy call OI at the $129 and $130 strikes — totaling 11,364 contracts and 22434 contracts, respectively in the July series.
With the broader market providing additional headwinds to FB’s ad-growth warning, don’t expect the shares to top $130 any time soon.
Molson Coors Brewing Company (TAP)
Molson Coors stock shed more than 5% on Wednesday, after SABMiller halted integration operations with AB InBev due to stockholder compensations concerns. Coors was slated to buy the 58% stake in its joint venture with SABMiller, MillerCoors, for $12 billion as part of regulatory approval efforts in the AB InBev deal. Miller’s actions have put those plans on hold, and Wall Street hates uncertainty.
Speculative options traders piled on TAP stock amid the turmoil, sending a short-term record 347,000 contracts across the tape on the brewer. That said, optimism appears to be winning, with calls snapping up 62% of the day’s take. TAP traders are currently focused heavily on the October 21 series $97.50 and $105 call strikes, where 23,236 contracts and 40,279 contracts are open, respectively.
Ford Motor Company (F)
Ford stock is on the ropes this morning, after the company missed Wall Street’s second-quarter earnings target. For the quarter, Ford said it earned 52 cents per share, missing the consensus target for 60 cents. Revenue rose to $39.49 billion from $37.26 billion last year, and handily beat expectations for $36.2 billion.
Options activity was cautious ahead of the report. Total volume came in at 214,000 contracts, with calls garnering 52% of the day’s take. That said, F stock’s 7% premarket plunge has the shares trading well below all major put and call OI for the July and August series.
The next potential backstop is the $12.50 strike, where 2,500 puts and 2,780 calls are open in the July 29 series.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
