U.S. stock futures are looking to add to Friday’s June jobs data rally, with the S&P 500 Index hovering just shy of all-time highs.
June nonfarm payrolls data showed the U.S. economy adding 287,000 jobs versus expectations for 170,000, erasing some of the post-Brexit fears on Wall Street. That said, Federal Reserve watchers aren’t expecting a rate hike at the next meeting due to potential Brexit fallout down the road.
Ahead of the open, futures on the Dow Jones Industrial Average are up 0.42%, while S&P 500 futures have gained 0.39% and Nasdaq-100 futures added 0.55%.
Options activity surged on Friday following the better-than-expected employment figures. Calls were dominant on the session, with some 19.4 million calls and 15.4 million puts changing hands. The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) was by far the most popular, attracting 10.3 million contracts (5.4 million calls).
Call volume was also thick on the CBOE, as the single-session equity put/call volume ratio dropped to 0.52 — a six-week low. The 10-day moving average slipped to 0.68, tying last week’s multimonth low.
In equity option news, Apple Inc. (NASDAQ:AAPL) and Facebook Inc (NASDAQ:FB) options traders began gearing up for earnings season on Friday, with both companies officially setting a release date. Elsewhere, news broke on Friday that Twitter Inc (NYSE:TWTR) was looking to ink a live streaming deal for NBA and MLS games.
Apple Inc. (AAPL)
Mark your calendars, Apple is scheduled to slip into the earnings confessional after the close on Tuesday, July 26. Analysts are expecting Apple to earn $1.39 per share in the latest quarter on revenue of $42.03 billion. Earnings are seen rising 33% year-over-year, while revenue is expected to fall 15.3%.
Driven both by earnings speculation and Friday’s jobs data, AAPL options traders piled into calls. Total volume soared to 948,000 contracts on Friday, with calls snapping up 65% of the day’s take — a percentage well above AAPL’s daily average.
Currently, weekly July 29 series options (those most directly impacted by Apple’s coming earnings report) are pricing in a post-earnings move of almost 5%, with the upper bound at $101.19 and the lower bound at $91.81. It’s still early, however, and if calls remain this popular heading into the event, implieds are sure to move sharply.
Facebook Inc (FB)
Facebook also set the date for its turn in the earnings limelight: After the close on Wednesday, July 27. Facebook earnings are expected to jump 62% to 81 cents per share from 50 cents per share last year, while revenue is seen soaring 48.6% to $6.01 billion.
Options traders were also call-heavy on FB stock options on Friday. Total volume rose to 546,000 contracts on the session, with calls responsible for 66% of the day’s take. Weekly July 29 series options are currently pricing in a post-earnings move of about 7.3% for FB stock, putting the upside at $125.52 and the downside at $108.48.
Judging by open interest in the weekly July 29 series, traders have yet to fully adjust their positions. Peak call OI totals roughly 32,000 contracts at the $121 call strike, with another 23,000 calls open at the $120 strike. Look for call OI to shift to higher strikes as FB gains ground heading into the report.
Twitter Inc (TWTR)
TWTR shares are trading off over 2% in premarket trading this morning following news that CEO Jack Dorsey’s Twitter account was hacked over the weekend. The news is overshadowing Friday’s report that Twitter is seeking NBA and MLS live streaming deals with Time Warner Inc‘s (NYSE:TWX) cable network Turner Broadcasting.
Twitter has already struck a deal with the NFL to stream Thursday night games, and is streaming pre- and post-game content around Wimbledon this week.
Friday’s news sent TWTR call traders into a tizzy. The stock saw total volume jump to over 273,000 contracts, with calls gobbling up 83% of the day’s take. Call volume has risen sharply in the past month for TWTR, with the stock’s July/August put/call open interest ratio plunging from a reading near 1.0 to its current perch at 0.64.
A solid break above $18 today could add fuel to the fire, especially with TWTR short sellers already in retreat — short interest fell 13% during the most recent reporting period. This morning’s retreat could give these bears more time to prepare, however.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
