U.S. stock futures are pushing higher once again this morning, as Wall Street continues to ride bullish sentiment from Friday’s stronger-than-expected July jobs data.
The U.S. economy added 255,000 jobs last month, blowing past economist expectations for 185,000 jobs. Against this backdrop, futures on the Dow Jones Industrial Average have added 0.12%, while S&P 500 futures are up 0.13% and Nasdaq-100 futures have gained 0.16%.
Options activity soared on Friday, with 21.3 million calls and 13.1 million puts changing hands on the session. The call bias was particularly heavy on the CBOE, where the single-session equity put/call volume ratio plunged to a four-week low of 0.52. The 10-day moving average, however, held at 0.66 for a fourth-consecutive session.
Driving Friday’s equity options activity, Netflix, Inc. (NASDAQ:NFLX) pulled back from early highs on Friday after Alibaba Group Holdings Ltd (NYSE:BABA) denied investment rumors. Elsewhere, Apple Inc. (NASDAQ:AAPL) gained momentum after breaking through heavy short-term call open interest levels, while Bristol-Myers Squibb Co (NYSE:BMY) plunged following news that it’s cancer drug Opdivo didn’t perform as expected in a lung cancer trial.
Netflix, Inc. (NFLX)
NFLX stock soared more than 4% early on Friday, as traders snapped up rumors that Chinese Internet portal giant BABA was investing in the firm. However, by mid-afternoon, Alibaba had denied those rumors, saying it has no plans to invest in Netflix at the moment.
For its part, Netflix noted in its most recent earnings release that it was still trying to move into China, through regulations were making the expansion difficult.
Options traders were onboard with the NFLX speculation en mass, as more than 568,000 contracts traded on the shares on Friday. What’s more, calls made up 67% of the day’s take, giving the session a decidedly bullish slant. NFLX stock peaked just north of $97 on Friday, putting the shares in contention with peak call OI (totaling 3,566 contracts) in the weekly August 12 series. However, the shares appear to be pulling back in premarket trading this morning. As such, the $97 region could create serious headwinds for NFLX this week, even with an upward bias in the broader market.
Apple Inc. (AAPL)
Another stock testing heavy overhead call OI is AAPL. Apple stock was staring down significant call OI at the $106 and $107 strikes heading into Friday’s trading, but jobs data and a positive broadmarket bias provided the initiative for AAPL stock to push through these hurdles on Friday. AAPL is now set up for a showdown at $110, which sports more than 45,000 call contracts in the August 19 series.
Some options traders appear to be putting a cap on AAPL shares by selling out-of-the-money call options. Among the nearly 1.5 million contracts traded on Friday were blocks of 15,000 September $115 calls and 18,800 September $125 calls — both blocks crossed at the bid (42 cents and 5 cents, respectively, according to Trade-Alert.com). Overall, calls accounted for a whopping 70% of AAPL’s daily volume on Friday, coming in well above average, though, as you can seen, not all of these call traders have bullish expectations for AAPL stock.
Bristol-Myers Squibb CO (BMY)
Even blue-chip pharmaceutical companies are hit hard when it comes to disappointing drug trial data. On Friday, Bristol-Myers reported that is cancer drug Opdivo — which is already approved for other forms of cancer — performed poorly in late-stage trials as a lung cancer therapy. The news sent BMY stock down more than 16%, putting the shares at their lowest point since March.
Overall, 509,000 contracts traded on BMY, hitting a near-term high for options activity on the shares. Despite BMY’s plunge, calls accounted for 61% of the day’s take, hinting that options traders may be looking for the stock to bounce back from this setback.
That said, BMY has a long road ahead of it, as the shares are trading below all major call and put OI strikes among near-term options.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
